The Supreme Court of Canada has turned its attention to the expropriation of Indian Reserve lands with the release in December of its decision in the case of Oliver (Town) v. Osoyoos Indian Band,  EXLAW 342.
The special constitutional status of Indian Reserve lands presents some interesting expropriation issues. The first one arises from the fact that Indian Reserve lands are a federal responsibility. Therefore, provincial expropriation legislation does not apply directly to Indian Reserve lands. Most expropriating authorities obtain their powers from provincial statutes so Indian Reserve lands are immune from direct expropriation action by those agencies. Nevertheless, the Indian Act contains a provision whereby the federal government can allow the use of Indian Reserve lands for public purposes by agencies holding powers of expropriation.
In 1957 the federal government passed an order-in-council pursuant to s. 35 of the Indian Act, R.S.C. 1952, c. 149 granting an interest in Osoyoos Indian Reserve No. 1 to the Province of British Columbia. The Province had requested and later paid for the land which was required for a concrete-lined irrigation canal that ran through the Reserve. The canal occupied approximately 56 acres. Title to the land was subsequently registered under the provincial land titles system as if the Province had acquired a fee simple interest in the former reserve lands. The irrigation canal is operated and maintained by the Town of Oliver pursuant to an agreement with the Province.
By the mid-1990's, the Osoyoos Indian Band had established a property taxation regime applicable to Reserve lands and sought to include the irrigation canal lands within the regime. This raised the issue of whether the irrigation canal lands were still a part of the reserve. If so, the Town of Oliver and/or the Province would be liable for the tax. The parties involved could not agree on this issue and the litigation resulted.
Under section 35 of the Indian Act, if Canada is willing to allow a proposed use of Indian Reserve lands for public purposes, it can either consent to the proposed taking or grant whatever interest is reasonably required by the expropriating authority. In the present case, the Province relied upon the expropriation powers contained within the provincial Water Act when it applied to Canada for the portion of the Reserve lands on which the canal was located.
One of the important considerations in this case was that the language used in the 1957 order-in-council does not clearly set out the nature of the interest that was intended to be conveyed to the province. The order simply consented "to the taking of the said lands" by the province. Some of the terms of the order were more consistent with the grant of a fee simple interest but others were more consistent with a statutory easement.
The court held that Canada had an obligation to the Indian Band not to grant a greater interest than was reasonably required for the public purpose. It also found that the Water Act contained a similar limitation. It held that a statutory easement was sufficient to achieve both of these objectives.
The SCC resolved the ambiguity in favour of the Indian Band. The Province was held to have acquired only a statutory easement and not a fee simple interest. This result was driven by the unique nature of Indian Reserve lands and it will likely prove to be an important native rights case. As a result, the land remains within the Reserve for purposes of the property taxation regime.