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BLG settles with First Nation

|Written By Julius Melnitzer

A complex 14-year-old dispute over $1.1 million in legal fees between the Temagami First Nation and Borden & Elliot, a predecessor firm of Borden Ladner Gervais LLP, has ended in a settlement that will be finalized next week.

Issuing the garnishment order ‘was the only way to make anything happen,’ says Robert Bell.

The resolution also brings an end to appeal proceedings in which the Ontario Court of Appeal was asked to determine the extent to which the Indian Act protects aboriginal funds from garnishment. BLG had lost its arguments in that regard at the Superior Court last year.

The case arose when the Temagami First Nation (TFN) retained Borden to assist with land-claim negotiations involving the provincial and federal governments.

“The retainer went back to 1984,” says Robert Bell, the chairman of BLG’s national council.

Initially, a federal government fund paid Borden’s fees, but at some point the payments ceased. Borden continued to act and by 1996 had amassed a $1.1-million account.

“Borden & Elliot didn’t do anything to collect the fees, all the while understanding that eventually the fees would be paid by the government,” Bell says.

By 1996, however, limitation periods were becoming a concern, and Borden commenced an action against the TFN and Teme-Augama Anishnabai (TAA).

In an article published in Blaney McMurtry LLP’s “Commercial Litigation Update” in January, Domenico Magisano, who with colleague Catherine DiMarco represented the TFN in the garnishment proceedings, asserted that when Borden served the original statement of claim, the firm “advised TFN that this was merely a procedural step and that BLG had no intention of enforcing on any judgment it might obtain.”

Consequently, according to Magisano, “TFN and TAA did not defend the claim.” Soon after, Borden noted both in default.

In fact, Borden took no further steps until 1999, when the TFN and TAA consented to an order granting the firm a charge over any proceeds the groups might obtain through settlement of the land claims.

In 2003, BLG sought and obtained default judgment against both the TFN and TAA.

“Counsel for the defendants were given a draft of the judgment before Borden & Elliot obtained judgment,” Bell says.

In accordance with the assurance given when Borden issued its claim, the firm refrained from taking any steps to enforce the judgment until 2008. Meanwhile, the TFN remained embroiled in complex internal governance disputes, including litigation, that made it difficult for Borden to ascertain whom to deal with.

“As long as the governance problems remained, it seemed clear that the band would not be able to deal with the release of funds,” Bell says.

“In other words, issuing the garnishment order was the only way to make anything happen.”

In July 2008, Borden issued a garnishment of funds payable to the TFN by the Ontario First Nation General Partnership, which distributes proceeds from Casino Rama to Ontario bands.

It’s unclear whether Borden, effectively caught in the middle of the governance dispute, communicated its intention to issue the garnishment order. According to Magisano, Borden obtained the garnishment “on motion to the court (without notice to TFN).”

Bell says he doesn’t know whether Wendy Earle, the BLG lawyer who was representing Borden’s interests at the time, “spoke to someone at TFN before the garnishment issued.”

There was, however, considerable communication after the garnishment. The outcome was an application before Superior Court Justice Lois Roberts to determine whether the garnisheed funds were exempt from attachment under s. 89(1) of the Indian Act.

The section provides that the real and personal property of a band is not subject to charge, seizure or attachment other than by an Indian or a band as defined in the Indian Act.

Last year, Roberts ruled in the band’s favour, concluding that Borden couldn’t garnish the funds that were sitting in a bank account on the Six Nations of the Grand River reserve. She rejected arguments by BLG’s Kate Menear and Alessandra Nosko that “debt” was not included in the meaning of “personal property” as used in the Indian Act.

"Instead, Roberts adopted the position taken by Magisano."

“For the purposes of the application of s. 89 of the Indian Act in the circumstances of this case, the relevant factors listed under s. 89 of the Indian Act are that the assets sought to be attached are real or personal property, that they belong to an Indian or a bank, and that they are located on a reserve,” Roberts wrote.

“There is no criterion concerning the source or nature of the funds to be exempted from seizure like, for example, funds generated in the commercial mainstream.”

On consent, Roberts awarded the TFN $27,000 in costs on a partial indemnity basis.

Borden appealed, but the parties continued to negotiate and reached an interim settlement in November.

Following mediation convened by Roberts, Borden abandoned its appeal.

The parties are scheduled to finalize the settlement, which includes payment to Borden, next Wednesday.

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