AAND Committee Meeting

STANDING COMMITTEE ON ABORIGINAL AFFAIRS AND NORTHERN DEVELOPMENT

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES ET DU DÉVELOPPEMENT DU GRAND NORD

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 6, 1999

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[Translation]

The Chairman (Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.)): Welcome. Today, May 6th 1999, pursuant to Standing Order 108(2), we will review the administration of leases under the Indian Act. Our witnesses today are the President of the Musqueam Park Residents Association, Mrs. Kerry-Lynne Findlay, and members of the association, Mrs. Grace Ng, Mrs. Katy Sheideman and Mr. David Abbott. Do you have an opening statement?

[English]

Ms. Kerry-Lynne Findlay (Spokesperson, Musqueam Park Residents Association): Yes, we do. On fairly short notice we were told we would have the opportunity to be in front of you today, so we want to thank you very much for this opportunity because I think it was short notice to your committee as well.

I have some written submissions I had prepared for the Senate committee on aboriginal affairs. That committee, of course, is looking into Bill C-49, but some of my written presentation certainly pertains to your inquiries on leases in Canada. So I will highlight some of that for you and make it available to you as well afterwards.

My hope is to speak for a little and give you the background and some of the situation that is being dealt with by Musqueam leaseholders in Vancouver. Then the other leaseholders, Ms. Ng and Ms. Scheideman, will have brief comments. Then certainly all four of us, including Mr. Abbott, will be happy to respond to questions.

First of all, just to give you an idea of where we're from and what our situation is, Musqueam Park is part of the Musqueam Reserve number 2, referred to as parcel A, situated in southwest Vancouver. There are 75 homes there, 74 of which are owned by non-aboriginals. They house approximately 200 men, women and children. In demographic terms, 70% of the homes are owned by retired people or pensioners, and the other 30% by working and volunteering couples with children. The total encumbrances against the homes are an aggregate figure of approximately $5.1 million.

According to the 1996 census reports from Statistics Canada, the average income on reserve number 2, which would include our subdivision and another prepaid subdivision next to us, before taxes from all sources, is $38,356 per year. In my materials I have a report on that, of which I will leave you a copy.

It's a 40-acre parcel that was developed in the 1960s. There's a master lease that had schedules attached to it. That master lease was in June 1965, based of course on a surrender by the band to the government for lease purposes. Significant to the leaseholders is one of the schedules attached to that lease, which is a tripartite contract between the government, the leaseholders and the City of Vancouver, mandating that the leaseholders pay their property taxes to the city, in exchange for which they are guaranteed city services for the duration of the 99-year lease. There are 65 years left on the leases at this point.

In terms of who brought what to the equation, the Musqueam Band gave over unserviced, unimproved, uncleared land—raw land, in other words—and the original development company and leaseholders put in all the roads, services, improvements and homes. In other words, they created the subdivision as it's seen today. There are renegotiation periods in the lease at 30 years, 50 years, 70 years and 90 years.

The conflict between the homeowners and the band is on two fronts: the level of property taxes levied by the band and the lack of accountability in the spending of those moneys; and how to value the land the homeowners lease for purposes of determining annual rental payments and property taxes.

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The litigation that has flowed from this problem has cost the leaseholders to date around $800,000 in legal and expert fees, and the interpretation of those three words in the lease, “current land value”, is now the subject of an appeal and cross-appeal in the Supreme Court of Canada.

The lease is flawed in many respects. From a lawyer's perspective, which is my background, perhaps 35 years ago this lease may have made sense in the context of that time. The wording of the lease is somewhat anachronistic in today's world, with terminology that isn't used any more. There has been a lot of refinement in leasing of all lands since that time, and certainly some jurisprudence in that area as well.

When we say the lease is flawed, I refer to the fact that there is no dispute resolution mechanism in the lease, other than just going to Federal Court. There's no repossession clause for non-payment, which of course is not good for the band because if they're not paid they have no repossession rights. They have to sue. There is no negotiation procedure set out, thereby making a reversion to a 6% default clause inevitable. In other words, in these leases there is a provision that says “there shall be negotiation”, and that negotiation is to determine a fair rent at the negotiation periods.

In the absence of coming to an agreement, there is a default clause that says 6% of current land value shall be deemed to be fair. That obviously is a real problem, because without a procedure on those negotiations or a standard set, the default clause comes into play and really negates the fair rent provision set out, which was supposedly the negotiation target.

Also, there have been no amendments made to the lease to allow for the new reality of the band taking over taxation authority. In 1991 there were no prepayment options, etc. So there are a lot of problems with the lease, quite frankly, on both sides.

I had the opportunity to take a look at a presentation made to you by department officials, I believe, through Bob Watts and others. In that presentation the point was made that even where leases have been turned over to the band under sections 35 and 60 of the Indian Act, they are still with the federal government because the federal government remains the landowner. These are crown lands.

The problem with that to the independent purchaser is that if there is no disclosure with respect to the fact that management has been turned over or it won't be the government you are negotiating with, it makes quite a difference in how things proceed. Certainly it's our opinion that if it says a lease is with the federal government, it's reasonable for people to assume that's who they will be dealing with. There should be addenda to those leases, or whatever, to reflect the new reality.

Also, in that brief from the department I noted they were talking about different kinds of devolution of authority to aboriginal nations. They talked about one group being on this section 35 and section 60 devolution. That is our situation in Musqueam. Authority to manage the leases under section 35 was handed over to the band in 1980 by the federal government, and that was not disclosed.

The dispute is that the homeowners have gone from paying approximately $500 a year, to $10,000 a year, to demands now up to $38,000 a year after taxes on these annual lease payments. If you take a lease payment of $30,000 and add property taxes of $6,000, because the taxes have also more than doubled since the band took over taxation authority in 1991, we're talking about an annual demand in the neighbourhood of $35,000 to $40,000 a year, where Statistics Canada has revealed that before taxes the average income is only that or less than that.

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So we're at an impasse with respect to that. It is de facto expropriation, in our submission, because it has collapsed the value of those homes. Homes that were once worth—in the Vancouver market, you have to remember—between $450,000 to $650,000 are now worth zero. I have documents here to show that is what has happened.

Also, all the lending institutions have either backed away completely from Indian leased land, or certainly from Musqueam leased land. I have some evidence to give you of that as well. No one can mortgage or get a loan against their property any more. The risk factor is considered way too high. It has put people in an impossible position, because they can't even borrow against equity in these homes they built, bought and paid for.

It's also adversely affecting the ability of other first nations to market their leasehold properties. I think that's very significant. I have a copy in my brief of a Sechelt Band brochure, where they're trying to attract leasehold purchasers to properties and they're having to deal with the Musqueam situation. So it's not a good situation.

I want to emphasize that this is a very real hardship that is being played out in Canada. There is taxation without representation and the breaking of that tripartite contract that was part of the lease. In all these matters, whether it is lease payments or property taxes, the homeowners living there not only can't vote at band council, they can't even make representations to the band council on their own behalf as to how it's impacting them.

There is a great deal of anger, sadness and shock among the residents there as to what's happening to them. Many of them have paid hard-earned taxes for decades, and there are World War II veterans there. They are feeling very abandoned at the moment by their federal government.

There is also the situation—and I will give you letters from government leaders—that this is negatively impacting the treaty process generally in British Columbia, since 95% of British Columbia is currently subject to aboriginal land claims. Although I realize this isn't the situation everywhere in Canada, in British Columbia it's extremely acute because of the extensive land claims that are going on and the spillover effect of what's happening through the Musqueam situation. Of course, Bill C-49, with its expropriation provisions, has exacerbated this situation and made it extremely difficult.

If would like to ask Kathy Scheideman to give a very brief statement and then Mrs. Ng, with your approval.

Ms. Kathy Scheideman (Member, Musqueam Park Residents Association): Good morning, honorable members of Parliament. My name is Kathy Scheideman.

In 1989 my husband and I invested $500,000 to buy a family home in Musqueam Park. This was a major commitment of our life savings, the proceeds from the sale of our previously owned house, and a sizeable new mortgage.

We both felt comfortable in our decision to live on native land and raise our young boys with the Musqueam Band community as our neighbours. I had taught native children and my husband had treated native patients in his dental practice for many years before we moved to Musqueam Park.

We felt confident signing the leasehold agreement to rent the land our home was on. The contract was with Her Majesty the Queen, Department of Indian Affairs and Northern Development, and as loyal proud Canadians, we trusted that the federal Government of Canada would uphold the conditions of the contract.

Our lawyer, our realtor, and the band assured us the lease was with the federal government and we were secure in our guarantee of the conditions outlined in it, including the negotiated fair rent increase based on the current market value of raw leasehold land. We were guaranteed that our relationship with the City of Vancouver would be like that of any other Vancouverite in regard to taxes, services and voting privileges.

We now find ourselves in an impossible position as land tenants, because these conditions agreed to were not upheld. Although we only recently learned that the federal government turned authority to manage the lease over to the Musqueam Band in 1980, nine years before we signed the contract, the land is still federal crown land. The ownership and responsibility for just and fair land management is still with the federal government.

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We have no vote, no voice or influence with the band, and we are completely at their mercy. The Prime Minister's Office refers our pleas for help to the Minister of Indian Affairs and Northern Development. Minister Stewart defines her role as having a fiduciary duty to the native people only. Kerry Kipping of Indian Affairs claims that our only source of federal political representation is our member of Parliament, Ted McWhinney, who has not received support from his colleagues to effect action on our behalf.

As a family with young children, we cannot afford the lease-rent payments and tax hikes of $37,000 annually. Yet we can't escape the burden of 66 years of this financial obligation with yet another rent hike in store. Our home is not marketable and can't even be surrendered back to the band. I even offered our home to Pamela McDonald, the PM's west coast liaison officer, as a donation to the Liberal Party's fundraising auction if the buyer would sign my lease with the band, but she replied she couldn't accept conditional donations. The mental and physical health of my family is deteriorating rapidly under this relentless stress.

I contend the federal government has a responsibility to protect all of its citizens, regardless of race. I have travelled here under difficult conditions to find someone who will take responsibility to end this incredible nightmare that should never happen in this country, our Canada.

Thank you.

[Translation]

The Chairman: Thank you.

Mrs. Ng.

[English]

Ms. Grace Ng (Member, Musqueam Park Residents Association): Honourable members of Parliament, thank you for the opportunity to appear before you this morning.

My name is Grace Ng. I'm one of the 74 leaseholders on Musqueam Reserve parcel A. I have lived in Canada for 19 years. I'm a semi-retired realtor. I never dreamt that I would possibly face bankruptcy on account of the house I fully paid for 15 years ago.

Let me present to you, from appendices A-1 to A-3, the listings I pulled out of homes for sale in the west side of Vancouver, B.C. in 1984. You will find that home A, which is the home I bought, and, in appendix A-2, home B, also in Musqueam Park, were on the market in the same price range as the other freehold homes in the prestigious areas of Shaughnessy and South Granville in Vancouver, B.C.

Turning to appendix B-2, you will find that these similar freehold homes in Shaughnessy and South Granville have almost tripled in value in 1999. However, looking back at appendix B-1, there are two homes for sale in Musqueam Park that are listed in today's market for $149,000 and $275,000—please refer to homes X and Y marked on the list. These homes are still not sold. The reason these homes are still not sold is because of the drastic rent hike and the uncertainty that Bill C-49 has created.

The Musqueam Band, which took over management of the leases, increased my annual rent from $484.55 in 1994 to $39,380 in 1995—please refer to appendices C and D. This is an 81-times rent increase, which is 8,127% in my calculation. If I were to include property taxes of $7,000, then my annual outlay on the house alone is $47,000. As spelled out in our lease, another rent review is due in the year 2015.

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The trial judgment of $10,920 rent per annum, which I promptly paid up in 1998, set me back financially because I had to pay four years' back rent for the years 1995 to 1998 inclusive. I paid $43,680 plus taxes for 1998. If you take $10,920 times four, you arrive at $43,680.

I have exhausted my savings. I cannot afford any additional payment mandated by the recent federal appeal court decision. You can refer to the figures in appendix E.

As the case now stands, I am liable to the sum of $150,000 for four years' back rent and lease payment for 1999. This figure is due in June 1999, which is a few weeks away. I cannot afford to meet this ridiculous payment, nor can I sell my house. The value of homes in Musqueam Park has collapsed to zero.

This uncertainty and devastation is causing much grief and suffering to my whole family, which includes my 12-year-old son and my 79-year-old mother. Where can we go? What can we do?

Thank you, all of you.

The Chairman: Thank you.

Mr. Abbott, do you have a statement?

Mr. David Abbott (Member, Musqueam Park Residents Association): Mr. Chairman, I'll answer some questions, if that's all right, should any questions be asked.

The Chairman: Thank you.

Mr. Konrad.

Mr. Derrek Konrad (Prince Albert, Ref.): I want to thank you for coming and sharing with us your difficult stories of the situation. I took a lot of notes on the difficulties you're facing, but what we need in this committee are suggestions as to where the government should proceed from here. What recommendations can this committee make to the minister, specifically on how you would suggest a change to leases?

I note that you said there was no disclosure when the band took over, that there might have been an opportunity there to open up the leases and take a look at how dispute resolution and mechanisms might be changed. I'd like to know from your side what you think would be a fair rent or a fair lease value. That type of thing is the nuts and bolts of what we have to work with to get over the difficulties you're facing.

Ms. Kerry-Lynne Findlay: I can respond to some of that.

First of all, I think what it takes is a realization and a commitment to there being a responsibility in government, because I noted when I read the department's submissions to you that when the department was explaining what a section 35 and section 60 delegated authority meant, there was a very specific statement that kind of leaped out at me from the page. It said that under that delegated authority, and since the land remains federal crown land, the minister is accountable for the actions of the band, and that means, of course, that the band is accountable to the minister.

We have found just the opposite in our dealings on this matter with the ministry. As recently as last night, at the Senate hearings, we were told by senior officials in the department that they have no responsibility to us, no responsibility to non-aboriginals on aboriginal land, that they see their role solely as playing out the fiduciary responsibility to band members, and that in fact they do not consider themselves a crown ministry in the general sense of that word, since they are accountable with a duty of care to all citizens of Canada. That is inconsistent with the representation that was made to you by department officials, when they said the minister remains accountable for that delegated authority.

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I think we have to start with who's taking responsibility for what and that should be clearly stated.

As far as the leases themselves are concerned, there has been tremendous development in lease law in the last two or three decades, and what has developed over that time—and I'll give you a couple of examples—would certainly help in the Indian leases as well as any other kind of lease, for that matter.

One of the things that are recognized now quite generally is that if improvements are put on the land by the lessees at the end of the term of the lease, whenever that might be, there is a credit given back to the person who has paid for those improvements. In the Musqueam lease, at the end of the lease the improvements are all handed back to the band with no acknowledgement as to the investment by the lessee, so they simply go back to the band. That's one area.

A second area is that there have to be proper procedures and dispute resolution mechanisms—as you correctly pointed out—put in these leases to say to people, in effect, either the lease terms themselves are so infallible that everybody should be able to understand exactly what they mean all the time, even over decades, with the only alternative to go to Federal Court.... This is no way to live a life. Certainly, if you're going to make a sizeable investment in a primary residence or even in, frankly, maybe a cottage or something like that, or in a business where you are leasing land—and there are many businesses that lease land from aboriginals—you have to have some sort of certainty there.

The modern way of looking at this is arbitration clauses that allow for independent arbitration, where both sides can make their presentations to an independent arbitrator and work it out. So I think that's very important. We don't have that in this lease.

Mr. Derrek Konrad: Do you have a model lease that you could recommend or forward to this committee?

Ms. Kerry-Lynne Findlay: I could certainly get two or three examples of the more modern terms and send them to this committee. I would be happy to do that.

Mr. Derrek Konrad: Is that acceptable, Mr. Chairman?

The Chairman: Yes.

Ms. Kerry-Lynne Findlay: Yes, I could do that.

I'd like to comment briefly on a couple of other areas. The other thing that is not in this lease—and it's understandable in the context of when it was written, in 1965. But there was given an initial 30-year period before there was renegotiation. The reason for that was to get past the normal amortization period on a mortgage for the lending institutions, which is 25 years, and they gave a five-year buffer. So that's why they did it. But in modern leases you see the renegotiation terms—and this is true of many Indian leases more recently done—of about five years, so you have a continuing process that more accurately reflects differences or increases in land value.

The other thing is that there has to be some sort of mechanism for both the band and the tenants to bring a lease to an end. In the Musqueam situation, because there's no repossession clause for non-payment, it forces the band—not that this has happened until very recently—into having to sue separately, without the same kind of repossession powers that most people would have. With the tenants, they're in a position that even on sufficient notice they can't surrender.

So one of our tenants, for example, has, through a lawyer, written to the band and said “I want to surrender my property. I want to walk away from it. All I am saying is please excuse me from the future. I'm all up to date in my payments; I want to go.” And he's been chasing the band for an answer now for well over two months. They simply won't respond to that. If you can't even surrender your equity back, this is an impossible situation. You're tied to the land.

Lastly, I realize that under the Indian Act non-aboriginals cannot vote at band council meetings, and that's understandable, particularly where you have, in many bands, the situation where there are more non-aboriginals living on the reserve than aboriginal people. However, to extend that to the point where non-aboriginals cannot even make representations on their own behalf, cannot even address band councils, we say that is simply not adequate. There should be a mechanism—and again, it can be right in the leases—that says on lease issues, on these issues that directly impact on these people, you will be able to make representations. And I don't think it's contrary to the Indian Act to allow representations.

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The Chairman: Monsieur Nault.

Mr. Robert D. Nault (Kenora—Rainy River, Lib.): Thank you, Mr. Chairman.

As we're studying this whole issue of leases, one of the reasons for it obviously is to bring some clarity to a lot of Canadians about just what we're talking about. We understand from discussions with the department that there are some 6,681 leases out there.

Ms. Kerry-Lynne Findlay: With subleases I think it's up to 12,500.

Mr. Robert Nault: Exactly. So this is not an unusual situation. In fact, if we were to talk about the legalities of it, it's very much a contract.

What you're discussing with us in essence is two issues. One is whether the contract is an acceptable one in today's terms and whether there are methods of changing the contract. As I understand it, there are two methods. One is to negotiate with the first nation whether you can make changes to the contract, and the other one is basically to go to the court. As we are all aware because we've been following this in the media, you've gone to the courts, and as I understand it, the courts have made some significant rulings on the lease itself.

So I have two questions for you. The first is on the process of negotiation. How are you doing in negotiating with the first nation? Probably the most arduous way of dealing with issues like this is to sit down with people and say, look, as the owners of the land and the lessors, it certainly is incumbent on you to understand that if this is not done in a fair manner the value of the property you're trying to lease will become zero and this will break down. And of course the whole objective of people who lease land, or lease property of any kind, is to make some sort of fair market return.

So I'd like to know, first of all, how the negotiations are going with the first nation and whether you are making some progress.

The second issue I'd like to know is if you could give us a general understanding of what, when you did go to court, the judgment suggested to you. By that I mean did the court say that the lease was illegal? Did the court say that somehow the band was not managing its affairs in a fair and above-board manner? I think that's important to know, because I look at this as no different.... As a landowner myself, when I lease a piece of property, or rent out a piece of property, I sign an agreement with a particular tenant. The tenants, of course—as you well know, being a lawyer, Ms. Findlay—have lawyers themselves, and when they enter an agreement, they should enter the agreement with both eyes open and understand where they're coming from.

So perhaps you could just give us a sense of those two issues. It doesn't matter which order you want to go in first. Certainly there is a dispute mechanism in place. It's the courts. You've already triggered that. We are somewhat uncomfortable because that's still ongoing, so we don't want to get into the details of that too much at this point. But we are certainly looking in general to get a sense of how you see this playing out.

The only other comment I would make is that this is not federal land; this is land held in trust for first nations. There's a big difference. And as the fiduciary, the crown, for legal reasons, does have an obligation to maintain the interests of the first nation. Their main role is to maintain the interests of the first nation.

Therefore, I have a very different view of how you see it, that this is crown land. It's not; it's Indian lands, and we are holding it in trust as the fiduciary as we have signed treaties to do on reserve land. So could you give me a sense of the two—first of all the negotiation, because I think it's important to know whether you're making any progress.

As I understand it, you made some comments in the Senate committee last night. I would very much like to have you repeat them here today.

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The Chairman: Ms. Findlay.

Ms. Kerry-Lynne Findlay: All right, First, on the negotiations issue, the negotiation with the band, from the leaseholders' perspective, has been arduous and extremely difficult. We have been trying to negotiate with the band for eight to nine years now, trying to find, to use the modern phrase, a win-win solution for everyone. It is well recognized that a land base and revenue from land bases are extremely important to aboriginal peoples. I mean, that's part of the concept of Bill C-49—for instance, that they get more control as they move toward self-determination.

There's not a problem with those overall concepts at all. I think I would like to note that these leaseholders are people who all agree with the general precepts of moving toward greater self-government and self-determination. People who resist that notion would never have lived on Indian-leased land in the first place. So the people living there are people who are sympathetic to those overall goals. It's when it comes to the specifics that we're having a lot of problems.

In the lease it calls for negotiation. In my understanding of that term from a legal perspective, and in fact from other aboriginal legislation and that sort of thing, the term “substantive” is usually implied there; in other words, real negotiation. Negotiation that is meant to get us from A to B. We were very frustrated in that process. We often dealt with committees of the band, who said they didn't have authority to negotiate but would listen. Often those committees would then say they would take this back to band council and get back to us. They never did.

There were many meetings held over many years and there were letters that went forward saying, let's try to deal with it this way in advance of the renegotiation date, which was 1995. That's why it was started four years previous—in order to try to continue to have certainty in this area, so there would be a smooth transition to whatever the new payments would be, so the equity in the homes would be maintained. There was a great deal of effort put toward that.

There were many, many proposals put to the band as to how to deal with this situation. Not one proposal was forthcoming from the band to the leaseholders. The only thing that ever came from the band back to the leaseholders was, well, maybe we can let you pay up to this maximum amount over a few years as opposed to paying it right this minute. This was no discussion of all the many permutations and combinations there could be.

I would like to say there are solutions out there. There are many ideas proposed by many people, and I have a few myself, as to how this could be done, and it would be for the benefit of all. But quite frankly, I think aboriginal peoples have done fairly well in court in some respects in recent years. I am told by band members that there was legal advice that they should not look to the negotiations, they should look to court.

So now knowing that context from band members telling me this, it puts it in a better context for me; I understand why those negotiations didn't go very far. We have had two decisions in Federal Court, one at the trial level. I guess I'm going to answer both your questions together because they really work in together. The trial level decision was October 10, 1997, in Federal Court, and the court of appeal decision was December 22, 1998.

In the trial decision, the judge agreed with the homeowners' approach to valuation. The result of that when the dust settled was that the payments would be $10,000 per year. That's plus taxes of course, and it's after-tax dollars. That was considered very high by the leaseholders, who had put forward an offer of $8,000 a year. However, all but three of the 74 homeowners have paid it. The three who haven't paid it are hardship cases; they simply were unable to borrow because of the collapse in the equity and couldn't find a way to pay it.

The result of the court of appeal decision in December is still actually being worked out. We don't have a perfected order. But the effect of it is that payments would be in the $25,000 to $35,000 range.

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Since the court decision, of course, there's been a lot of furore and difficulty. There's been a lot of press on the issue. We were told by the band initially that they would only meet with us to discuss how to pay the money, the maximum; they would not....

You have to remember too that it is within the authority of the band to set the rate wherever they want. They don't have to set it at the maximum the court allows, but they have pursued that course.

So we had a great deal of difficulty actually sitting down together. I've been to Ottawa twice, spoken to the minister twice; and through that whole process, finally about three weeks ago I sat down with the chief, their lawyer, five of their band councillors, two other leaseholders, and we had what I think was a very professional and civil discussion.

I think for the first time the band has started to realize that their financial expectations on an annual basis from the lease are impossible for the majority of these people, again, the majority of whom are retired or pensioners. However, even though that realization is there, they have not stepped back from their position that the maximum should go forward at the moment. What they have done in a subsequent meeting I had with their council is say they agree with us on what I think is an important issue. They agree with the leaseholders that there is a federal government responsibility to help find solutions. To that end, I wrote to the minister and asked for a trilateral meeting.

The minister wrote to me last week and said she thought my request was premature and what she would like to see is joint proposals coming from the band and us, and she wanted to ensure that those proposals did not exclusively ask for an infusion of money. That's kind of where we sit.

Senator Austin produced a copy of the letter at the Senate hearings last night, which surprised me, and read some of the letter into the record. It wasn't a private and confidential letter and I'm not sure where he produced the copy from; it was a letter I received last Thursday.

I'd like to just say something on the court decision for a moment. The court has not considered the many different issues you just mentioned in asking me the question. This is one of the problems with the court process, unless we go to other litigation, which, quite frankly, I have been working almost day and night to avoid.

Mr. Robert Nault: Let me ask you if I can, and this is really the difficult question, if we are to accept that this is a contract like any other contract the tenants would sign.... I know of many 99-year leases. If this was not an Indian band but a very well-to-do individual in Vancouver who decided to develop these lots in some fashion, sign this same kind of contract—and I wanted to ask Kathy this question because she just signed a lease very recently. When I enter into a commercial arrangement with anybody, I sit down with my lawyer and I ask them the million-dollar question: Is this a good thing to be doing for my family? What are the legal ramifications of it for me?

For example, our understanding of the agreement is that in the last 10 years the average cost to the tenants has been $338 per year.

Ms. Kerry-Lynne Findlay: That's wrong. That's from a department backgrounder that is incorrect in many of its facts.

Mr. Robert Nault: Okay, it says here the total rent paid per lot during the first 30-year period was divided as such—10 years at $298 per year. Now I'm not talking about taxes.

Ms. Kerry-Lynne Findlay: I know what you're talking about.

Mr. Robert Nault: We're talking about leases, right? Ten years at $343 per year and 10 years at $375 per year. Is that roughly close, then?

Ms. Kerry-Lynne Findlay: It's close, but it's not correct. I corrected the department on that backgrounder, and they've chosen apparently not to correct their facts. In any event—

Mr. Robert Nault: Well, you can put on the record what the exact number is, but let's assume for the sake of argument it's $500 a year. I mean, that's a pretty good deal.

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The reason I asked Kathy the question is because she obviously went to her lawyer in 1989 and said she was going to purchase this particular home for $500,000. That's a pretty big chunk of change. When you sat down with your lawyer and said here's the 99-year lease, what kind of legal advice did you get as to whether or not this was a good lease arrangement to enter into and things of that nature? As I say, when you enter into any agreement, you have to do so with both eyes open.

Was it because this was aboriginal land that this contract was different from a normal contract you would enter into with any individual who happened to own that particular land? I use the example of CN. CN owns a whole pile of land in this country, and they do lease lots out to individuals who own homes on them. The cost to the individual homeowners is a significant amount more than what you were paying on an average basis, if these numbers are somewhat correct. Could you give me a sense of that? As a homeowner, I'm just curious as to whether there's a perception that this contract was somehow different from any other contract under the law that you would sign.

Ms. Kerry-Lynne Findlay: I hope we both can get a chance to respond.

Mr. Robert Nault: I'm done now, as I understand it, by the way the chairman is looking at me. I just wanted to get those few questions in.

Ms. Kathy Scheideman: That was an elaborate question. Do you want to go first?

Ms. Kerry-Lynne Findlay: Sure, I'll start.

It's very simple what the difference is between CN and any other landlord. The contract changed in midstream, and nobody told anybody. The only reason the contract changed, and in fact the specific terms of the contract changed, was because of aboriginal legislation and department procedure impacting, which would not be the case with another landowner or landlord.

With regard to the 1991 turnover of the property taxation, for instance, there was no pre-warning, no consultation, no discussion. It was done over the protest of the City of Vancouver officials. The mayor of Vancouver flew to Ottawa to personally protest the handover without any discussion with the landowners.

Under schedule E to the master lease, incorporated into the lease is a tripartite contract, which I told you about before. That tripartite contract was a contract in and of itself among the City of Vancouver, the federal government, and the leaseholders, mandating that property taxes be paid to the city, with a corresponding guarantee of city services for the 99-year term of the lease.

There was some dismantling of the Indian Act in 1988, as I'm sure you know, and then there was enabling legislation through the B.C. legislature in 1989-90. Subsequent to that, that taxation authority was handed over.

When in 1989 a purchaser went to a lawyer or a realtor, the realtor said, “This is backed by the federal government. You're signing your lease with the federal government. You're paying your property taxes to the city, like any other homeowner in British Columbia. You're guaranteed city services for the duration of your lease.” Those were all preconditions to people putting their $500,000 on the line. That was proper advice at that time.

But two years later there were specific legislative and department policy changes that literally took away the legal rights from these leaseholders. As well, there was the section 35 delegation of authority to the band in 1980.

We've had this question before. If it were Cadillac Fairview that handed over or assigned their property to Trizec, what difference would it make? In a commercial context between one independent commercial body and another, it may not make a difference. But handing it over to the band without any disclosure does make a difference in the marketplace. The marketplace is entirely tied up with certainty. Certainty in the marketplace dictates price. It dictates what people pay. I can assure you that if people had known that transfer had taken place, they may still have bought there, but they wouldn't have bought there at $500,000. They may have bought there at $250,000 or $200,000.

• 1200

It would have made a difference. Why? It's not a racist distinction. The distinction is that aboriginal peoples have a particular social-political agenda, which may be a quite proper agenda. But particularly in terms of money, it is quite different from a sort of faceless third party.

So the transfer over is a material fact that people should have been allowed to know in assessing the comparative risks in putting their money on the line. As I say, it may not have meant that they didn't buy, but it may have affected the price. It may not have, but the point is that they could have taken it into account. You may say, someone goes there and puts their money down, and it's just a contract; didn't they know what they were signing? They didn't sign on to the contract they now have, and that's the difference.

Ms. Kathy Scheideman: I'd like to add to that. I just wanted to pass something to you, Mr. Nault, that might explain some things to you.

But first I'd like to say that although my husband and I are not business tycoons—or we'd have a more expensive house, I suppose—we did go to our lawyer and a realtor. We had bought a house before, a simple fee for land. The lawyer and the realtor pointed out to us that because of the guarantee that comes along with the honoured name of Her Majesty the Queen and the Department of Indian Affairs, the conditions I summarized very briefly in my paper, which you received, would be honoured. If these conditions were palatable to me, then it would be a reasonable transaction to enter into. That includes the words I've included here, that is, “negotiated”, “fair”, “rent increase based on current market value”. Very clearly, it was interpreted by everyone as raw leasehold land that it would be evaluated on.

Now, I'm not the only one. There are a number of people who bought around the time I did and prior to that, and all of us went through the same legal rigmarole checking it out. We all received more or less the same advice.

To add a little credibility to that, I think, my house is unique in the purchase of it in that the house was a forced sale, and the price of the house was determined by a B.C. judge. The reason for it is that the previous owner had defaulted on his payments for some time. He had four mortgages. If they had foreclosed on the home, only the first mortgage would have been paid out, or until the money ran out. So it was decided that it would go to court. The judge made a decision about the amount. Then we paid the amount, and it was divvied up. So the exact amount was $479,000.

This is our little souvenir, which I'll publish one day, and I'll be happy to pass this around. It is the original, as you can see, dated Thursday, February 15, 1990. We moved in a week before Christmas, so two months prior to that, this was the first sign anybody ever had that there was going to be a problem. We bought that house knowing there was going to be a rent increase. We knew that in five years we would have a rent increase. We anticipated that in 1989 the rent would be increased considerably. We weren't trying to cheat anyone. We weren't thinking we were getting a good deal. For a couple of years we would. But we also knew that when we sold the house, it would all be reflected in the cost.

• 1205

Just for your interest, it says in this article—and I'd be happy to pass it to you—that the 76 homeowners currently pay the band anywhere from $188 to $420 a year to live there.... I'm sorry, I'm confused here. Here it is. It says that the lots are valued at around $240,000 each. Now our lots are assessed at $700,000, but the current market value is zero. There's no way the real estate market increased that much.

Ms. Kerry-Lynne Findlay: If I can just add to that, there's another explanation for it. The method of valuing the houses changed under the band. When the City of Vancouver dealt with the taxation, we were assessed on fair market value, which is the way most people's property taxes are assessed. When the band took over taxation, they started assessing us based on comparable properties held in fee simple off the reserve, which of course are not subject to the same market vagaries as leasehold property on reserve land.

So what has happened, the reason the taxes have gone up as much as three times, is that they have changed the method of assessing the value. That is why, when Mrs. Scheideman says they're valued at $240,000, it's true, because at that time that was based on fair market value under the city's governance. Now under the band's governance, they're valued at $700,000 or $800,000. So even though the mill rate has remained the same, this of course makes a tremendous difference.

Another quick point I want to make is that you mentioned the lower rents in the beginning. First of all, they weren't low in the context of when the lease was done in 1965; they were extremely consistent. The leasehold properties there in 1965 were worth $5,000. Also, what is forgotten in that equation is that there was considerable upfront money, lump-sum money, paid to the band. They didn't just get these annual revenues. They got well over $200,000, which in today's terms is worth an awful lot more than that. And the total value of those lands at the time was $350,000. So they were paid about 55% or 60% of the total value at the time, plus then guaranteed these annual revenues.

That upfront money, and the need for certainty in the first 30 years to get past that amortization I mentioned earlier, is why those rents were low for the first 30 years. But people keep forgetting that considerable upfront money was paid, as well as six homes built for band families who moved from that area and who had been living in very poor conditions, in shacks really. CMHC-approved homes were built for them.

Also, it was not only the realtors and lawyers, in dealing with these properties, who did not know these changes would occur. But as I'm sure you know, any time you want to get a mortgage on any property, you have to get a certified appraisal. The banks insist on it and they make you pay for it. The certified appraisals that were given to people for their mortgage financing—and I have many copies of those—all valued the land at the fair market value at the time and took into account the lease, but nobody dreamed these increases would be coming.

People who bought subsequent to 1991—there were some sales for a couple of years after taxation was taken over by the band—went directly to the band and said to people in authority within the band, “I'm going to put a lot of money down here. What is your position with respect to this renegotiation?” They had direct assurances from band members that the band would deal reasonably and that the amount of the increase should not affect their decision to buy. That was very material to the decision-making process those people went through. They relied on those direct band assurances that the increase would not be so much as to make a difference in their decision to purchase.

The Chairman: Thank you.

• 1210

[Translation]

Mr. Keddy. Thank you for your patience.

[English]

Mr. Gerald Keddy (South Shore, PC): I'd like to thank the Musqueam Park leaseholders for appearing here today. It's been a very interesting hour. There are several issues here, and I'm trying to compartmentalize them and break them into manageable areas. Much of what you said certainly changes some of the issues we've looked at already, and there are other things you've said that I have serious questions about.

I'm extremely interested in the fact that the minister would state that she has a fiduciary responsibility only to first nations in Canada. Certainly she has a fiduciary responsibility to first nations, without question. But she has a much greater responsibility than that, given the extent of her budget and the amount of money she spends on it. That point may be argued. But I'm shocked, actually, that she would give you the answer that she has a fiduciary responsibility only to first nations.

It seems to me there are several issues going on here, and I think some of those issues are muddying the water, so to speak, clouding or confusing the issue. For my own information, I'd like to know the amount of money paid upfront that you just mentioned was in the original agreement. I'd also like to know the value of that property. I'm not convinced of the argument; unfortunately, it may be true. But if that land were not Indian land, what would the value and the taxation be on that property based anywhere else in Vancouver?

I have other questions, Mr. Chairman, but just answer that one.

Ms. Kerry-Lynne Findlay: On the issue of value and taxation, we know what it would be, because it was in the hands of the City of Vancouver until 1991. We have copies of the difference between the assessments then and now, so we know that under their system, they used a fair market value criterion, as they did for all other properties in the province—and I dare say most of Canada. I believe most people pay their property taxes based on fair market value done through assessment authorities throughout the nation. So we know it would have been different, because it was different. They approached it in two entirely different ways.

Mr. Gerald Keddy: You spoke of two specific areas in Vancouver, and I'm trying to remember the names of them—

Ms. Grace Ng: Shaughnessy.

Mr. Gerald Keddy: Shaughnessy and Granville?

Ms. Grace Ng: South Granville.

Mr. Gerald Keddy: Yes. If the same home were built on a similar piece of property in either of those areas, what would the property tax be?

Ms. Kerry-Lynne Findlay: The property taxes would be similar to what the band is charging us. The difference is that those people own those homes freehold and in fee simple, so the asset they have is a different asset. For the properties where we are, we only have a leasehold interest, and the market value is based only on a leasehold interest, not on fee simple land.

Mr. Gerald Keddy: Are there other leasehold interests in Vancouver, so you can give a comparative market value from other leasehold interests of similar value?

Ms. Kerry-Lynne Findlay: Yes. There's a development in Tsawwassen, the Stahaken area. They continue to pay their property taxes based on fair market value.

Mr. Gerald Keddy: This is non-first nation, right?

Ms. Kerry-Lynne Findlay: No, this is a first nation leasehold.

Mr. Gerald Keddy: No, I'm talking about other leases on similar property that's non-first nation.

Ms. Kerry-Lynne Findlay: No. There is some City of Vancouver-held lease property in the False Creek area and that sort of thing, but it's not single-family houses. They have townhouses and condominiums, that sort of thing.

The City of Vancouver, which is a good example, is right now in the midst of renegotiating with a lot of their lessees. They have taken the approach.... They've started those discussions, at the city's initiative, seven years ahead of the renegotiation period. It's been quite public in the press that they have offered them prepaid options, payment options, and all sorts of things. We have been denied by the band the prepayment option. That's something that's been floated out several times.

• 1215

Mr. Gerald Keddy: To me there's a bigger issue here. I think we just cloud it by trying to differentiate between first nation land and a regular tenant or lessee tenancy agreement. I'm not sure it does your case any good at the end of the day to do that, quite frankly.

What I do see here...I'm just trying to put myself in your situation, with the amount of investment that you've made and the fact that there's no opportunity to get out of that and no opportunity to recoup it. It seems to me—and I've certainly bought and sold property and leased machinery, at least—that there's a couple of other liabilities at stake and I'm not sure that it's necessarily the first nation. Number one is the realtor who sold you the property, and there's the contractor, or the lawyers, who handled the deal.

If I buy a piece of property and I have my solicitor or my lawyer search the title, and I sign a lease or buy that property in good faith, and at the end of the day it turns out that agreement was not what I thought it was when I purchased that property, and I can prove that, then there's a responsibility there on the part of the lawyer. Absolutely, absolutely.

Ms. Kerry-Lynne Findlay: Well, being a lawyer, of course I'm quite sensitive to negligence issues with lawyers, so I'm quite aware of what can happen, and a great deal of the negligence cases revolve around real estate—

Mr. Gerald Keddy: Yes.

Ms. Kerry-Lynne Findlay: —and complaints in that area.

Mr. Gerald Keddy: Because there may have been a right-of-way through the property. There may have been a claim on it that the lawyer is supposed to find.

Ms. Kerry-Lynne Findlay: However, the difference is that, as I tried to explain before, the circumstances changed. How would a lawyer, looking at that lease in 1989, have known that a guarantee, a mandate to pay property taxes to the city and a guarantee of services embodied in a tripartite agreement with two levels of government, would be abandoned and broken by those two levels of government? How could a lawyer or a realtor be held responsible in negligence for changes in legislation that weren't even on the horizon then?

Now, if they had been, for instance, if it was actively being done right at that time, and the lawyer looked at it, I think the lawyer would have had a duty to say, “Well, you know, you're entering into this, but are you aware”—and I've done some due diligence—“that the property taxation here is about to be handed over to the band, which may result in changes, and schedule E, that contract you're looking at, is going to be worthless?” There is no way that any realtor or lawyer could have known that previously. If you're dealing with any other kind of landlord, they are never in a position that they get to take over your taxation.

Mr. Gerald Keddy: Yes, but that's not the issue we're dealing with. What we're dealing with is the question of liability. If there's no liability on the part of the lawyer or the real estate agent and the liability is with the government, then there's still a liability there somewhere. If you signed an agreement and that agreement has changed significantly and you signed that agreement on behalf of the government, then the government has some responsibility. They have a fiduciary responsibility to the Musqueam Band, without question, but they also have some responsibility for the agreement they signed, which has changed the terms you understood when you purchased your lease.

Ms. Kerry-Lynne Findlay: That's exactly our point—

Mr. Gerald Keddy: No, I'm—

Ms. Kerry-Lynne Findlay: We say there is that responsibility and there is a duty of care to all citizens by the federal government, and that might in fact end up being the subject of a lawsuit.

Mr. Gerald Keddy: Well, if you're not able to bring Bill C-49 into it, to bring the expropriation—and I'm not in agreement with what you're saying on the expropriation on Bill C-49—

Ms. Kerry-Lynne Findlay: Well, you haven't heard me on that point.

Mr. Gerald Keddy: I just heard your comment on it. To bring that part into it, I'm not sure it helps your case. I think you have a legitimate case, that the federal government has some responsibility to the Musqueam Park tenants. Whether you want to argue that in the rent increases, in the rate increases, in taxation increases...all with the band, that just clouds the issue. You have to cut this down into manageable pieces.

• 1220

The first nation has the ownership, they have a lease with you folks, and they have some ownership of the land, not the Government of Canada. We can get into the whole trust issue, but it's first nation land, and if.... We're not making any headway on that, or I'm not able to wrap my head around that, I can tell you quite frankly.

However, without question, with respect, Mr. Chairman, there's a responsibility on the part of the federal government to the tenants with whom you signed the lease, and if that lease is now changed and it's with the Musqueam Band, and they may have set different terms or something in that, I don't know if you have an argument there. But you definitely have an argument to go back to the federal government, and I don't see how the federal government can ignore that.

Ms. Kerry-Lynne Findlay: Can I ask Mrs. Scheideman to just tell you what Kerry Kipping, who has probably appeared before this committee and with whom we've dealt quite a bit—he's the senior official in the department—said to her last night on that issue?

Mrs. Kathy Scheideman: What he said to me last night, on a one-to-one, was a reiteration in effect and expounding on what he had said to us in Musqueam Park when Kerry Kipping came out to speak to our neighbours. I asked him last night about the responsibility, the fiduciary responsibility of the Department of Indian Affairs for our lease.

As I said in my statement, initially we appealed to the Prime Minister's Office for help. We all received form letters back saying basically this is not my area, I've forwarded all your letters to Indian Affairs, Minister Jane Stewart; this is her area of responsibility. She has not responded to any of my correspondence.

But he said that's not correct, that the Department of Indian Affairs is unique in that it is not representative of anyone in Canada at all, except first nations people. I said, “Is it not a federal bureau?” He said yes. I said “Does not that term itself, “federal”, mean all Canadians?” He said “No, this is the one area of the federal government that only represents first nations people.” He was very emphatic on that. So my response was then that it's the duty of Minister Stewart to be making that very clear to the Prime Minister, so that we can have some body that will take this on.

Mr. Gerald Keddy: Concerning your comment and Kerry-Lynne's comment on conditions when you signed your leases, I think you have to take it out of the context of you and the Musqueam—if you are unable to come to an agreement, you're unable to come to an agreement. I don't think we can legislate that, or change that. That's a contractual agreement between you and the Musqueam Band, and that may not be what you want to hear, or satisfactory, but I don't know if there's anything we can do about that.

However, if the conditions have changed in your lease, I would think you signed that lease, I think in your words, honoured by the Queen and the Department of Indian Affairs, and if the conditions have changed and you can prove that.... I realize you want to avoid litigation, but if you can prove that, then there's a responsibility on the part of the federal government for those changes. If those changes have had a serious economic effect upon you, then I would think the government would have to have some responsibility for that.

I'm not a lawyer. I'm not pretending to be one. I'm not very good at being a lawyer. However, this seems very clear. Unless I'm missing something, it seems very clear that there has to be some federal responsibility here. I don't think you can divide it up and somehow make it an issue between the park and the Musqueam Band. If the conditions have changed, if the lease has changed, and if you signed a lease in your belief and you can prove that with the federal government, then the federal government has the responsibility.

• 1225

Ms. Kerry-Lynne Findlay: Well, we hope so.

[Translation]

The Chairman: One last question.

[English]

Mr. Gerald Keddy: Thank you.

[Translation]

The Chairman: Mr. Finlay, several members have asked to speak: Mr. Bryden, Mr. Reynolds, Mrs. Barnes, Mr. Konrad and Mr. Finlay, and the meeting is supposed to end at 1 p.m. I know that this is a complex issue, but we have to be patient.

Mr. Bryden.

[English]

Mrs. Sue Barnes (London West, Lib.): Mr. Chair, on a point of information, how many minutes are people getting for the questions and answers?

The Chairman: Five minutes, but I gave more.

Mrs. Sue Barnes: You've been going much more than five minutes. So that we can get to other people's questions—

The Chairman: Yes, I know, but it's not easy.

Mr. John Bryden (Wentworth—Burlington, Lib.): I'll move along briskly.

The Chairman: I have given 10 and 20 minutes.

Mrs. Sue Barnes: I know you have.

The Chairman: It's not easy, but for me, in my job, I respect the witness first.

Monsieur Bryden.

Mr. John Bryden: Tell me, in your opinion, does the federal government have any responsibility for the $1-billion condominium leaking problem in Vancouver? There are all those people. It's a $1-billion problem. They're losing their homes because they bought properties that are leaking. Do we have any responsibility?

Ms. Kerry-Lynne Findlay: I'm not competent to answer on that. I don't even know the specifics.

Mr. John Bryden: Well, all right, I'm not asking you as lawyers; I'm asking you as individuals. Does the Province of B.C. have any responsibility for compensating those people who have lost their homes, or does the municipality have any responsibility for those people?

Ms. Kathy Scheideman: I don't know who they signed their leases or agreements with or any of the background. It would not be reasonable for me to make any kind of judgment with no knowledge.

Mr. David Abbott: I believe the answer is yes. To some degree, the provincial government and the municipal government, primarily the provincial government, have agreed that indeed they do have a responsibility, but to what degree has yet to be determined. They had the Barrett commission set up by the NDP government to investigate it. The results of that were recommendations. Whether or not those recommendations will be acted upon remains to be seen.

Mr. John Bryden: In the final analysis in that instance, though, there is a responsibility on the people who bought those condominiums to ensure that they were properly constructed. Regardless of the quality of the rules that did or did not exist around them, they bought those condominiums.

As I've always understood it, when you buy a house, you take your chances. You have to make sure personally that the house is secure. Isn't that true?

Mr. David Abbott: One would of course agree.

Ms. Kerry-Lynne Findlay: Of course there's an individual responsibility. Our point is that the circumstances that were there were changed.

Mr. John Bryden: So we will agree that when you leased these properties, you knew full well that you didn't own the properties and that there was a chance that the terms of the lease would change with time.

Ms. Kerry-Lynne Findlay: That's correct.

Mr. John Bryden: And you were prepared to make a very big investment.

I have to tell you that very near to where I have a cottage in Muskoka there's exactly the same situation. People have built on aboriginal land and they've made investments, and so they also have leases. So there is a fundamental responsibility on the part of the individual that you take your chances.

Here's the other question. If your landlord had been the Canadian Automobile Association, for example, which is a non-profit organization, and if that Canadian Automobile Association entered into exactly the same lease as you are talking about now, and if somewhere along the line the federal government and the provincial government—because you've mentioned the provincial government also ratified some of the changes we're talking about—other levels of government, made changes to the legislation governing non-profit organizations such that it changed the ground rules with respect to the leases that already existed, would you be here before us?

Ms. Kerry-Lynne Findlay: The answer to that on two levels is yes, we would. Any time—well, maybe not this committee—you enter a contract of any kind, any kind of legal agreement, if that contract is frustrated by one of the parties or that contract is changed, or there's a unilateral backing out of the terms of that contract, there are remedies one would want to pursue.

• 1230

One of the differences here that I think is an extremely important one—and I don't know if any of you have had the chance to read the court of appeal's decision—is that the court of appeal based its decision in terms of valuation on the fact that this is Indian land. The judge who wrote the majority decision stated that we have to start valuing Indian land higher so that it is seen as more valuable. In other words, when the court interpreted those words, they brought aboriginal issues into the equation, which they wouldn't have done if it were with CN or some other group. That decision is worth reading for that reason.

Mr. John Bryden: That misses my point, which is simply this: governments change the rules all the time. In Ontario, they've introduced fair market assessment, and the property assessments of some businesses in my riding have gone up tenfold, and it does happen. Governments are always changing the rules, because that's what governments do, and it has impact. When you enter into a business agreement of any kind, whether you're an entrepreneur or somebody who's buying or renting property, you know somewhere along the line there may be a change in the ground rules, and this does happen.

It's not that I don't have sympathy with you; my problem with this issue is that when you enter into a contract, when you buy property or you make an investment, you take risk. When that risk turns against you, you can't automatically ask the federal government or any other level of government to compensate you for the risk you should have seen.

I would submit to you—and this is the only comment I have, and I'll conclude—that I believe, from everything I know about this issue, that if it weren't for the fact that the Indian band knows it can get a maximum compensation of a $39,000 rental, provided the federal government comes in to save the homeowners...and the homeowners, on the other hand, will never come to terms with the band, because you always have the hope that we'll come in with compensation. If the federal government, the provincial government, the municipal government, and anyone else who is involved said firmly and absolutely that you took your risk, you took your chances, both sides, then I think you would come to terms with the band. But right now the band sees the federal government's pockets as an opportunity to give them more money on this issue without hurting you. You'll still be there, but you'll be compensated, and you in turn hope that you will get compensation from the federal government. It's just another instance where Ottawa is asked to bail out a situation, and what it's doing is wrecking the ability of the two parties to negotiate in good faith.

Ms. Kerry-Lynne Findlay: I think that's a very unfair characterization. I don't think you should make that characterization without reading fully the background material that I will be giving you. We certainly did not start any of this with the hope or the expectation that there would be federal money. We were trying to deal with the band directly. That didn't work out.

We now say, and I think we have legitimate reason to say, based on some of the reasons that Mr. Keddy was given, that there is a responsibility there. We are looking to the government because we see a responsibility, not because we think there's money there that we can tap into.

Mr. John Bryden: Please don't think I'm accusing you. I'm just pointing out that as long as one has, in a litigious situation like this, the opportunity of the government, whatever level of government, coming in and bailing out the two parties, the two parties will never negotiate in good faith.

The reality is exactly as you said. It is of no benefit to the band if these properties go down to zero, and it's of no benefit to you. So the only reason I believe this dispute is going on is because it's believed that money from Ottawa or money from some level of government is going to bail out both parties. That's the reason you can't come to terms, and I'm sorry about that.

The Chairman: Thank you, Monsieur Bryden.

Madame Scheideman.

Ms. Kathy Scheideman: Sir, I take exception to your comment that we as purchasers should have seen the risk. Perhaps I'm naive, being on the west coast and not close to Ottawa, but I was born in Vancouver, lived there all my life, and had a great respect for the word of my government.

When I see a piece of legal document that says Her Majesty the Queen, the Department of Indian Affairs, and has, in black and white, very specific conditions on it that are guaranteed, then I suppose you're saying to me that I should have seen that this is not necessarily the word as it's meant to be from the government, that I should not trust my government to honour its word. Is this what you're telling me, sir? If those conditions, as the government had guaranteed me, were carried through, I wouldn't be sitting here today in this mess. And believe me, I don't want to be here.

• 1235

The Chairman: Mr. Bryden.

Mr. John Bryden: Do you want me to leave it?

The Chairman: Yes.

Mr. John Reynolds (West Vancouver—Sunshine Coast, Ref.): I'm going to follow up on that because I was concerned that it seems to be the understanding of some members of the committee or people in government that these people, or the original ones who signed the leases, got a good deal.

I've read all the material, and I know the real estate markets in Vancouver because I moved there over 30 years, 37 years ago. The deal that was signed originally was a good deal for the native band. They got a good market value, plus a lease payment for that land. You could have gone and made the same deal anywhere else in the city at the same prices. Lots were $1,500 to $2,000 a lot. The people who did that 30 years ago and still live in their same home have benefited from a massive increase in land because of the influx of people into the community. They now have an asset.

These people signed a contract, as they've said, quite legally—you can correct me on any of this if I'm wrong, because I want to ask you a question at the end of it—with the Government of Canada. Most people who sign contracts, whether it's with the Government of Canada, or the Government of British Columbia or any other province or municipality, feel they're dealing with people who will deal in a normal business fashion in a fair manner. These homes all had a good value until a judge puts a value of $39,000 a year on a lease. The marketplace itself has told us that this is not a fair deal. Nobody can now sell a home in this area, and they're all going to lose it back to the band because of this amount of money. Everyone in this room, unless you're a multimillionaire, could have a hard time paying $40,000 a year just for a land lease, forget about your house on top of it.

The question I want to get to is this. I think it was a fair deal to start with, and I think most people who are living there would like a fair deal on the lease, something you could live with that would be fair. Forty thousand dollars a year over the length, that's $2.5 million on a piece of land. I live in the richest constituency in all of Canada, and we don't have a lot the size of Musqueam worth $2.8 million in West Vancouver. You can buy waterfront property for $2.3 million with a house on it. It's a ridiculous amount of money. And I know some judge came up with it, but it doesn't give me much confidence either.

But what I want to ask you is, as the people there, has the government ever said to you...? My understanding is that Mr. Siddon turned this over to the band without telling any of you. Nobody was given notification that the federal Government of Canada was no longer going to be the person you deal with on this lease; it was now going to the band. Has anybody from the government said, “Because of that, maybe we should go back and use what the market value was at that time. We'll buy the property from you.”

I know Mr. Bryden has a hard time, and so do I, with governments putting money out for anything. But it seems to me there's been something wrong here, that what you signed originally is not what's there now, and obviously what's there now is not fair, or there would still be a market value. People would be jumping at buying those lots if they didn't like them, because they do that in other parts.

This is a bad deal for the people living there, and we have to solve this problem somehow. And I don't disagree that maybe the band is saying, we use this as a negotiation tactic; the federal government shouldn't have to give them any money. It was a good deal to start with. There should be a fair lease now until the lease is up.

But explain to me how you can sign it with the federal government, how it can be turned over and you have no say about it. I don't understand how that could happen.

Ms. Kerry-Lynne Findlay: There are a couple of points there. First of all, it shows you the level of lack of disclosure here, because when the taxation authority was handed over in 1991 under Tom Siddon there was no consultation in any meaningful way with the residents. It was done over protestations, as I've said, of residents at the final end of it with the City of Vancouver.

The tenants at that time—or homeowners, as I like to call them, because they do own their homes—assumed they would still be dealing with the federal government in the renegotiation of the lease terms because there had been no notice given of the turnover of management of the leases. Nobody living there in 1980, or who bought subsequently, was even aware of that fact.

• 1240

So there were letters written then. There was a change of government too, and there were letters written to Minister Ron Irwin saying, “We assume we'll be negotiating with you. Who is your representative? We'd like to start early, and keep certainty” and this sort of thing. Ron Irwin wrote back and said, “No, you're not dealing with me; you're dealing with the band. Management of the leases has been turned over.”

In the correspondence, he didn't say when it had been turned over or how. So the leaseholders assumed that it had happened at the same time, in 1991, with the turnover under Minister Siddon. We were told officially by the Department of Indian Affairs that the lease had been turned over in 1980—at a meeting I had in the regional director's office in Vancouver in January 1999. When I was told that, and I had another representative with me, I said, when and how, and nobody told the leaseholders. I got a sage nod. In other words, they knew they hadn't told anybody. The band hadn't told, and the government hadn't told. But that in fact was the case.

We only got a copy of the documentation because the Reform critic Mike Scott took it upon himself to get hold of Jane Stewart's office about three weeks subsequently and asked for a copy of the documentation, and it was only then. So now we're talking about February 1999 when we saw for the first time the letter from John Munro, who was then minister in a previous Liberal government, that under section 53 gave this delegated authority over to the band. That was the first official notice we had.

So people were left totally in the dark as to the actual management and that sort of thing. As for your second question, which was whether the government had said they would compensate us, the answer is no, they have not.

Mr. John Reynolds: I have one comment, Mr. Chairman. I hope this committee, when they look at this, will see it's a matter of honour here, no matter what government was at fault and did it. That's the issue here. It's a matter of honour. When you transfer something and you don't tell people, you have to take a responsibility. I hope this committee will inform the minister of that when they finish their hearings.

[Translation]

The Chairman: Thank you, Mr. Reynolds.

Mrs. Barnes.

[English]

Mrs. Sue Barnes: Thank you, and welcome. Thanks for coming today.

Although I'm new to the committee, I've tried to get myself up to speed on your case and on the overall situation here. I do have a background that I hope I can help with, because I used to teach some contract law, and I also taught for the law society on real estate. So I was pretty familiar with leasing situations before coming to this job in 1993.

I know when you try to condense all your material and present it to us some of the stuff maybe gets said one way and it's not entirely factual. I want to make sure we get a couple of things straight here. I think we can do this fairly shortly.

I understand you said you're under a cross-appeal and an appeal right now to the Supreme Court of Canada. But it has to go through a leave to appeal, is that not right?

Ms. Kerry-Lynne Findlay: Yes, that's what I meant, that it's at the leave to appeal stage.

Mrs. Sue Barnes: I figured you did. It's on the record, and I thought I'd give you an opportunity. So it's at a leave to appeal right now. Is there a timeframe before you think you'll know about that?

Ms. Kerry-Lynne Findlay: It's speculation, of course, because the court doesn't tell you those things. We're thinking that we'll probably know—we're hoping—by the end of June, but it may not be that soon. It may be as late as September on the answer to that.

Mrs. Sue Barnes: So again...and I do have some discomfort as a lawyer talking about something, but I know that if it ever gets up there it's not going to be because of anything we said over here.

Ms. Kerry-Lynne Findlay: That's for sure.

Mrs. Sue Barnes: So this is an honest interchange, and I think as a committee we obviously welcome hearing your side, and hopefully we'll hear another side at another day.

The other thing you mentioned—and I want to make sure I have it accurately—is that all those improvements just revert back. But was not on the second...the current standing decision of the courts that they took into account I think about $120,000—that figure sticks in my head—for improvements before they did your market value and then did your percentage on that?

Ms. Kerry-Lynne Findlay: Yes. Both the trial level and the court of appeal level agreed that the calculation was to be done on the land component only. In other words, from the market value of the improved lot they deducted something for the servicing costs, which is quite right. At the trial level it was about $120,000.

• 1245

Mrs. Sue Barnes: Did they change at appeal?

Ms. Kerry-Lynne Findlay: It's still being debated in the settlement of the order, because the band council, although they didn't argue it at either level of court, in the settling of the order they have now brought it up that they have a problem with the calculation. So that's why we still don't have a perfected order, because that is still being discussed.

The cross-appeal on the leave application is on that point. The band's counsel has sought that the calculations should be done on the improved lot and those costs should be added back in.

Mrs. Sue Barnes: I get where you're coming from now.

I want to invite you, by the way, if you think anything is inaccurate that we have by way of background, certainly send it in. I would certainly be pleased to read it, as one member of this committee anyway.

Ms. Kerry-Lynne Findlay: Well, on that backgrounder, I will just tell you.... Actually, Craig Hutton, who's here, gave me a copy of the department's backgrounder back in February, and there were so many inaccuracies in it—

Mrs. Sue Barnes: Well, you stated that, so—

Ms. Kerry-Lynne Findlay: —that we wrote something back. So what I will do is I will give you our response to the backgrounder.

Mrs. Sue Barnes: I think we can have that delivered to the clerk, who then can distribute it to everyone.

Ms. Kerry-Lynne Findlay: I'll do that.

Mrs. Sue Barnes: There's one other thing I want to know. My information is that in the original, when the band turns over to the crown the ability in the lease to surrender, these are the words, and I believe these to be accurate: “in trust to lease the same to such person or persons and upon such terms as the Government of Canada may deem most conducive to our welfare and that of our people”. So that's in the original, long before you had, as you put it, a new landlord.

In other words, the original surrender to the federal government to lease said we give you this to lease to other guys, but you do it with our best interests at heart. I mean, those are the standing instructions in this particular surrender and that is the basis where the fiduciary duty starts. What you've argued today, and it's been quite interesting for me to listen to, is that if you were dealing with say the minister or the crown, that would be a different situation from dealing with the band through its delegated or agent authority for the crown.

I'm saying to you, and I'll put it to you very frankly, I don't see the difference. I really don't see the difference. If the surrender and the obligation to lease were to say to keep the band as the main uppermost position—not the rest of Canadians, not the tenant, but the band—then you've got a bit of a problem with advancing that argument. If you have ways then maybe you will be doing that.

I just put that out there. I don't expect you to defend that. I'm just saying to you that's what I see right now.

Ms. Kerry-Lynne Findlay: I realize we're running short of time, but I'll make a brief comment if I may.

That is why I put in my submission some of the problems with the lease overall, because my understanding from the band is they feel the federal government let them down in this lease as well, particularly in the first 30 years. They have that argument they make.

I think the difference is that this is, if I can use a turn of phrase, where theory meets reality. In theory, what you're saying sounds right, but in the reality of a situation where you have competing and different agendas, it doesn't really quite work out that way. Although the government has a fiduciary responsibility to the aboriginals, which is quite clear and quite proper, we get back to whether there is any duty of care or accountability to the average citizen who has relied on what they understand to be a general accountability reposing in the federal government. If there is that general, really dual, role of both a fiduciary duty and an accountability, that is where we say someone has dropped the ball, which is the federal government.

• 1250

A fiduciary responsibility.... And I think this is worth noting, because I think this is very important. If you have a legal background then you're probably more familiar with that term than a lot of the average Canadians are. A fiduciary responsibility has to do with keeping uppermost the welfare and well-being of who you're the fiduciary for. Our submission is that this cannot be so narrowly interpreted as to mean that is the absolute maximum dollar you can get on one contract in one little place in the middle of Vancouver, as opposed to a broader interpretation. That is, you want to get a good solid return for the band on their money, but you also want it to be fair as between the parties you're dealing with so there is a continuity of that revenue, so there are good and sound business relationships being maintained.

To say that under a fiduciary relationship you support this one area that results in financial collapse and bankruptcy and on the other hand affects other first nations puts you in a bad light with respect to all your business dealings. I don't think that's a proper discharge of fiduciary responsibilities.

Mrs. Sue Barnes: I think we have to understand that the fiduciary relationship is between the Government of Canada and the Indian bands.

Ms. Kerry-Lynne Findlay: Absolutely.

Mrs. Sue Barnes: It's not a fiduciary relationship under this situation to the general public.

Ms. Kerry-Lynne Findlay: No, but I used a different word; I didn't say the government.

Mrs. Sue Barnes: No, I realize that. I just want to clarify it. And because my time is short, I'd love to talk to you a lot longer, but they're going to cut me off again.

Ms. Kerry-Lynne Findlay: Well, I'm happy to talk to anyone on the committee at any time.

Mrs. Sue Barnes: I mean, let's do the hypothetical. You gave us an example. You're around $900,000 homes, you've got very beautiful property. These are the comparables that were given to me of other areas that were comparable. That's what you're saying. If you had certainty you would think your values would be in this neighbourhood.

Ms. Kerry-Lynne Findlay: No—

Mrs. Sue Barnes: I want to ask Ms. Ng, who's provided this testimony.

Ms. Grace Ng: If we had certainty our market would naturally not have collapsed like so.

Mrs. Sue Barnes: So if you had certainty again, you would have market again of some value.

Ms. Grace Ng: Yes, of some value—not freehold value.

Mrs. Sue Barnes: But it never was freehold.

Ms. Grace Ng: I have noticed that as your lease goes toward the end it diminishes in value. I could show you from the assessment that in 1991 I was given an assessed value at $551 and then I reviewed it, and it was sent back to me at $389. I have proof right here.

Mrs. Sue Barnes: I am sure you've got all that, and I accept your word on that.

Ms. Grace Ng: Over the years—

Mrs. Sue Barnes: Because they're going to cut me off, I wanted to get a couple of points in.

Ms. Grace Ng: The reason there is a difference in price between freehold and leasehold is that you never get to own the land.

Mrs. Sue Barnes: That's right.

One of the things most people around the table would understand would be assignment of contract situation. Say I had a mortgage with somebody, and bank X, without my consent, assigned my mortgage to bank Y. I still have exactly the same duties and obligations under an assignment in that situation. So the parties being different parties doesn't always change in contract the responsibilities. That's the point I wanted to make to you.

My concluding point, Mr. Chair, is I really see a need here for the parties themselves to get together and negotiate. Because it is contract law, you can negotiate something different from what the court has dictated to you. It's not the band that put that lease price on there; it's a court.

Ms. Findlay, you said earlier that you're doing everything to stay out of court, and I take you at your word for that, because what I see is the leave to appeal to court. So I take it that behind the scenes you're trying to do some dialogue, and I think that's really important.

I will say the same thing to the band when they come before this committee, as long as I'm physically in the room. And I'm sure that even if I'm not in the room, they'll read these transcripts. I think both parties should be talking to each other. Then when they come to the point of talking—because I may not have said the same words as my colleague on this bench, and I don't think he intended them to sound as harsh as they may have come out.... The idea is when people in any negotiation—whether it's a labour negotiation or whatever—when people have to negotiate they usually with goodwill come together and make that negotiation in the best interest. I liked your idea of win-win.

Thank you very much.

• 1255

Ms. Kerry-Lynne Findlay: Thank you. I'm trying, and that's certainly our approach.

[Translation]

The Chairman: Thank you, Mrs. Barnes. Thank you, Mrs. Findlay.

I have two members left, Mr. Konrad and Mr. Finlay, who is being very patient. I apologize, John. I know this is an emotional matter, but this morning our witnesses are talking about their rights. We will continue.

Mr. Konrad.

[English]

Mr. Derrek Konrad: Thank you.

I really enjoyed the exchange between Mrs. Barnes and you on fiduciary responsibility and who should benefit. But it still seems to me that somebody shouldn't get their throat cut just because they have the upper hand. There has to be goodwill and that type of thing.

I have a letter here from a person who wrote, I presume, to all members of Parliament and said “the Musqueam chief has suggested we could eat grass”. It must be tough dealing in a spirit of goodwill with a person who has that attitude.

Ms. Kerry-Lynne Findlay: We're trying.

Mr. Derrek Konrad: This idea of caveat emptor, or tough luck, pal, as an adequate response to a situation like this doesn't sit too well with me.

I have a question for Ms. Ng. On appendix B-1 you said one of those homes was yours.

Ms. Grace Ng: Home A is the house I bought.

Mr. Derrek Konrad: That's A-1. I'm going to appendix B-1. I see it's on a page with houses of a similar value. When I look at the two homes marked X and Y they look like quite nice homes, and the rest of them look like a neighbourhood where you wouldn't find very nice homes. Would it appear on this page, if the price were better with this sort of home?

Ms. Grace Ng: No. This is the first page on the west side for detached homes. You cannot get any lower. The first house is listed at $149,000, and no one is buying it.

Mr. Derrek Konrad: What would be the price of it if it were on a freehold piece of property?

Ms. Grace Ng: If it were freehold, it would be $700,000 to $800,000.

Mr. Derrek Konrad: How much would it be if there were certainty on the lease?

Ms. Grace Ng: There is so much uncertainty there has not been any acceptable prices for homeowners in the past five years. Perhaps in Salish Park, which was prepaid, the price might be in the $400,000 range.

Mr. Derrek Konrad: I see.

Ms. Grace Ng: But our market has totally collapsed. We cannot even give our house away. It is a deficit. It is a liability to us now.

Mr. Derrek Konrad: That's what I see from the letter from Ms. Scheideman. Could you give it to the Liberal Party?

Ms. Kathy Scheideman: A little black humour. The Reform Party didn't want it either.

Mr. Derrek Konrad: That's all I have to say. Thank you.

The Chairman: Thank you, Mr. Konrad.

Mr. Finlay.

Mr. John Finlay (Oxford, Lib.): Thank you very much, Mr. Chairman, and thanks to these people for being with us.

I have a brother and a son who live in Vancouver in the northern west end, so I have some knowledge of the area, but not a great deal. I don't want to pontificate. I have appreciated what other members have said—Mr. Bryden, Mrs. Barnes, and Mr. Reynolds. But I want to just ask a question on the letter of May 31, 1995, to you, Ms. Ng. I want to understand.

The letter suggests that the rental that has applied for the previous thirty years is no longer acceptable for the next twenty years. Starting in 1995 there's an overholding rent. Then it tells you how you can pay it ahead or not and so on until there's something settled. On page 2 it says:

As noted in our previous correspondence, the appraisal that was done on the land subject to your lease suggested that a fair annual rental rate for the next twenty years would be $39,380.

• 1300

Who did that appraisal? I think you're suggesting it's a great increase, and I quite agree, but you also talked about appraisers. These people are accredited, are they not? What appraisal are we talking about here?

In the next paragraph it says “...the amount of the annual rental...starting June 8, 1995, is the sum of $39,380. This rental rate was calculated by multiplying the aforesaid appraisal by six per cent”. Since the figure in the paragraph ahead is $39,380, I'm a little lost. Is this just an error, and the appraisal rate is something else? Do I have to take 6% off that to find out what it was appraised at? That's not too difficult; I could do that. I just don't know whether somebody's trying to confuse me or you.

Ms. Kerry-Lynne Findlay: No. I can answer that for you.

This letter was sent to every leaseholder at that date in 1995. There had been several years of attempting to come to a negotiated settlement at that point. The last offer made to the band at that point was $8,000 per year, which was rejected.

Several months later, we each received this letter. The appraisal they're talking about is an appraisal the band commissioned by a certified appraiser by the name of Danny Grant. In that appraisal he used freehold or fee simple values off the reserve as his comparables. So that 6% is based on his appraisal of the properties at that time, as though they were held in fee simple off the reserve. Then they multiplied his appraisal figure by 6%—

Mr. John Finlay: Per year.

Ms. Kerry-Lynne Findlay: —to get the annual sum they said. For instance—I guess my house must be smaller than Grace's—my letter said $36,000 even. Hers said $39,000. So it was particular to each leaseholder.

Mr. John Finlay: But the appraisal was done in 1991.

Ms. Kerry-Lynne Findlay: No, I think the appraisal was done around 1995, at the height of the market. Values have fallen considerably in Vancouver since then.

Mr. John Finlay: Am I right in saying the appraisal on your property or this property was not $39,380, it was 6% per year less than that, from whenever it was made?

Ms. Kerry-Lynne Findlay: No. The $39,000 represents 6% of a whole. You'd have to calculate what the other 94% was to get the total.

Mr. John Finlay: I know in the rent control bill in Ontario it was a 6% increase. I've been paying it every year automatically from the office.

Ms. Kerry-Lynne Findlay: But the difference is that's a 6% increase, as opposed to 6% of a whole aggregate value. That's the difference.

Mr. John Finlay: All right. Thank you. That helps.

Ms. Kerry-Lynne Findlay: I wish it were a 6% increase.

Mr. John Finlay: Again, just so I'm sure, there was a court case over this $8,000, $10,000, $39,000, whatever, and the ruling was something in the range of $10,000.

Ms. Kerry-Lynne Findlay: Yes. That was at the trial level in October 1997.

Mr. John Finlay: Then it went to appeal and the order said $28,000 to $36,000. Because of this appeal, I take it the homeowners have appealed that, or this settlement order hasn't been finished yet because the band wants to change the base appraisal because it improved serviced lots, which you will obviously—

Ms. Kerry-Lynne Findlay: Both of those statements are correct. The final order hasn't been put through on the appeal level because they now are arguing on the servicing cost aspect. Because we only have 30 days from the pronouncement, we have appealed that decision. We've asked for leave to appeal to the Supreme Court of Canada. The band has cross-appealed to the Supreme Court of Canada because they want the improvements or the servicing of those lots to be included in the calculation. In other words, they're hoping for a higher amount than they have now at the appeal level. We're hoping for lower.

• 1305

Mr. John Finlay: It seems like we're going to end up, as we often do, paying a lot of court costs and lawyers, and so on, to settle something that perhaps—

Ms. Kerry-Lynne Findlay: Should be talked out.

Mr. John Finlay: —as my colleague, Susan Barnes, has suggested, should be done around a table.

Ms. Kerry-Lynne Findlay: I totally agree with Mrs. Barnes on that analysis.

Mr. John Finlay: But I'm very loath to suggest that somehow the court has been remiss in any way in what they've come up with. I guess that's a problem I have.

Ms. Kerry-Lynne Findlay: If I could mention something on the court of appeal decision, one of the statements made by the court was that in the narrow context of what they're being asked to look at, which was basically how do you interpret those three words, “current land value”, that's all they've been asked to look at; that's all the evidence that has been before them.

They stated in the judgment that they did not have to look at the impact on the leaseholders. That was not a consideration for them. Also, regarding many of the circumstances around the lease, and in fact the lease itself, whether it's a good lease or whether it's vague and ambiguous, or what's wrong with the lease, none of these questions are before the court in this particular piece of litigation. That's why I'm saying that I'm trying to avoid more court, because if we can't talk it out between ourselves and the band, or ourselves, the band, and government, if we cannot come to some understanding, this inevitably will lead to further and protracted litigation, because the leaseholders will have no option but to try to bring all these matters to the attention of a court for determination.

Although I'm a lawyer, I've certainly been working very hard to try to avoid that, because I believe the answers are there. I believe there are options, but they need people with goodwill to sit down and discuss them to avoid that circumstance. The leaseholders, who are under this tremendous burden of no equity in a primary residence, which is in fact for most of them their only asset, have spent $800,000 in legal fees and appraiser fees already. These costs are astronomical, and in my opinion avoidable by discussion.

Mr. John Finlay: Thank you very much, Mr. Chairman.

[Translation]

The Chairman: Thank you, Mr. Finlay.

[English]

Ms. Kerry-Lynne Findlay: By the way, we're not cousins, even though we have the same last name. But we probably were cousins many years ago.

Mrs. Sue Barnes: He's missing a “d”.

Ms. Kerry-Lynne Findlay: That's right. He spelled it wrong.

[Translation]

The Chairman: The third generation. Thank you.

[English]

Madame Karetak-Lindell.

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): Reading from my notes, I see that it was in the 1970s and 1980s that the value of the land started increasing. I look at the invoice for the annual rent, and it says $484.55 in June 1995. Being a real estate agent and being a lawyer, can you tell me, didn't any of the tenants feel at that time, when the land values were increasing, that maybe the band was being shortchanged in this situation and that they were getting the short end of the deal? Didn't anyone feel that there was something not fair in the business equation, that one side was getting a raw deal because of the current market? I don't profess to be any expert on market value and real estate and all that stuff because of where I'm from—

Ms. Kerry-Lynne Findlay: Can I respond first?

Mrs. Nancy Karetak-Lindell: —but didn't someone feel earlier on, before this came to a head, that there was something unfair in this equation, that only one side was getting a benefit from this arrangement?

Ms. Kerry-Lynne Findlay: Maybe I could answer first, and then let Grace Ng answer as well.

First, again, in the way you frame the question, I think you are forgetting the upfront payments. As I mentioned to start with, the band benefited in many ways. First of all, they were given an upfront payment of approximately 60% of the total land value at the time the deal was put together. And secondly, that was raw, undeveloped, uncleared land that they got at no cost to them.

• 1310

Mrs. Nancy Karetak-Lindell: Okay. If I can interject again, is it not true that if you buy stocks at a set value and they increase in value you collect royalties, depending on how well your investment has done? Wouldn't that be the same situation in this case also, that their investment or their value at a start over the years because of market...? Let's say it was a stock, I had bought stocks in a starting company, and then over a 20-year period or whatever period, they went from 5¢ a share to $50 a share. Wouldn't those people be expected to get a fair return on their investment?

Ms. Kerry-Lynne Findlay: Well, consideration or payment takes many forms. Payment for anything is not just necessarily dollars, and that's what I was trying to tell you—what the consideration was the band received. They received the upfront money. They received annual revenues guaranteed as to amount, which they were not getting on this land previously, and it was not being used in any full sense of that word. They received work done on that property at no cost to them. Roads were put in, sewers, electricity, curbing, improvements, landscaping. All sorts of things were put into that property that benefit the band. They use those same roads. They will get the use of those services and homes and improvements at the end of the lease.

There's another factor here. The Shaughnessy Golf Course is right in the middle between Musqueam Park subdivision, with 75 homes, and Salish Park subdivision, with 147 homes on a prepaid lease. There was a very well-known case called Guerin v. The Queen in 1985, I believe, where the band took the federal government to court and said they breached their fiduciary duty when they negotiated that lease, that they didn't properly involve the band in the process, or whatever. The decision was that in fact the federal government had breached that duty, and the result was a $10 million payment by the government to the band for that.

There is no reason, if the band felt that our lease was unfair or not a good deal, that they couldn't have included our leases in that lawsuit. They chose not to. And I suggest the reason they didn't include our lease in those lawsuits was that it was not an unfair lease to the band, either as it was originally conceived, based on the market values at the time, or even over the first 30-year period. That is why the band did not include us in that kind of litigation nor look to the government at that time.

What you're talking about, in effect, is people who have a lease term coming forward and in effect volunteering to pay more. I would suggest to you that this is a higher standard of care than asked of anybody in any similar situation.

What the tenants did is they went to the band very early, years ahead of the renegotiation period, and said “Let's sit down and talk so you know how much money you're going to have coming in, there's certainty in our land, and we retain the equity in our land. Let's find a win-win solution where now with the new market realities you can have a very good return on your money and we can maintain stability in this neighbourhood and live as good neighbours.” It didn't work out.

Ms. Grace Ng: Kerry has covered most of what I wanted to say, but I want to point out that obviously the market for homes or the lots have not increased in value by 81 times over the years, which is really very obvious, and they are asking 81 times what they were asking.

Ms. Kerry-Lynne Findlay: Can I mention one further thing there very quickly? We've mentioned before that the market in Vancouver has now fallen back again. We had a huge increase in values there in the late eighties and it's now fallen back again. The band is not saying to us that they will now reappraise our homes at the 1999 values in terms of our discussions. They are still hearking back to the 1995 values, which are higher, and they expect to be paid based on those 1995 values. So it works on both sides of the equation.

• 1315

The Chairman: Go ahead.

Mrs. Sue Barnes: May I just ask a question? When you went to court, was it the fact that the judge at the second court, the one you have right now, used the values and set your lease payments based on what it was at the time you should have renegotiated or everybody wanted to renegotiate, and that will be the set point for next 20 years too?

Ms. Kerry-Lynne Findlay: Exactly. It's based on the 1995 appraisals based on comparable fee-simple land off the reserve. The court decision was that in order to encourage a higher valuation of Indian land and in order to give them as good a return on their investment as possible, it should be valued as comparable fee-simple-held property, even though that's not what it is. That was what the decision was based on.

Mrs. Sue Barnes: Okay.

Ms. Kerry-Lynne Findlay: I want to thank you very much for the opportunity of being here today and all your patience from the chair.

[Translation]

The Chairman: Thank you, Sue.

What you have said this morning has helped us to understand how the on-going trials are affecting and worrying your families.

Thanking you for affearing before the committee. I know you, your children and your spouses will still face some tough times, but be strong and don't give up. Your courage will see you through and I know that you will keep the lines of communication open, which is important. People have been patient this morning, but these are difficult times. I would not want to be in your shoes. We are here to try to find a solution together. Have a good trip back. Thank you and we will meet again next week.

The meeting is adjourned.