Musqueam Indian Band v Musqueam Indian Band (Board of Review): Supreme Court of Canada Considers First Nations’ Right to Tax Golf Course Based on its Value as Residential Land

“Canada has never come to terms with First Nations people and our special place within the fabric of this country.” – Doug Cuthand

The recent Supreme Court of Canada (“SCC”) decision in Musqueam Indian Band v. Musqueam Indian Band (Board of Review) 2016 SCC 36 (“Musqueam Indian Band”) represents a powerful pronouncement on the ability of a First Nations group to rely upon the group’s own authority with respect to the use, assessment, and taxation of their reserve lands.  While technically pronouncing only on a single legal issue (property tax assessment of leased reserve land of First Nations), the Court has also firmly thrust itself into a larger political discussion about federal responsibility for such persons, and all the related program and spending questions this entails.

As the shutters open wider and wider on the history of Canada’s relationship with its Indigenous peoples, imbalances are increasingly revealed and remedies pressingly pursued.  As a starting point, various court decisions have led to good faith principles and legislative reactions.  However, the record of drawbacks is stout.  This recent SCC pronouncement is another chapter in the quest for reconciliation between the Crown and Indigenous peoples.  The language that flows in this decision is noteworthy in many respects.


The Shaughnessy Golf and Country Club owns a golf course in Vancouver, on reserve land belonging to the Musqueam Indian Band.  The Musqueam Indian Band is a First Nations band government in British Columbia and is the only First Nations band whose reserve community lies within the boundaries of the City of Vancouver.  Starting in 1958, the Club leased the reserve land from the Musqueam.  The lease limits the use of the property to the operating golf course.  The Club, during this time, was paying property taxes based on the value of the land as a golf course.  However, in 2001, the Band appealed a tax assessment of the property to the Musqueam Indian Band Board of Review, arguing that the actual value of the leased land should be its value as residential land, which would have generated a higher value.  This argument was based on the Musqueam’s interpretation of its own property assessment by-law.

The Board requested a decision from the Supreme Court of British Columbia on whether the use of the leased land as a golf course could be reflected in evaluating the property value.  The Supreme Court of British Columbia responded in the affirmative, stating that the use of the property as a golf course could be taken into account when evaluating the land value to assess its highest and best use.  On appeal by the Band, the British Columbia Court of Appeal upheld this decision and added to the previous decision by finding that the use of the land as a golf course was classified as a “restriction” on use, which was “placed by the Band,” and was to be assessed in the property’s value pursuant to the language of the Band’s property assessment by-law.

The Decision

In Musqueam Indian Band, which was released on September 9, 2016, the SCC held that an Indian band evaluating the value of rented reserve lands for property tax reasons under a band by-law is still restricted to the “highest and best use” (the “HABU”) principle.  The HABU is a fundamental principle used in Canadian assessment law.  Although the case specifically relies on a technical interpretation of the band’s by-law language, the Court’s confirmation on the HABU is interesting in its extension beyond British Columbia.

The assessment appeal is rooted in the aftermath of the Guerin decision.  In Guerin v. The Queen, [1984] 2 SCR 335 (“Guerin”), the Musqueam were prohibited from leasing out the reserve land.  The band was awarded $10 million in return for the Crown working out the leasing of the land on the band’s behalf.  The band gave up the land to the Department of Indian Affairs.  The SCC found that the Crown had breached its fiduciary duty when, in 1958, it entered into a 75-year lease with the Golf Club on terms not agreed to by the Band.  The Crown created a deal with the golf club that ultimately hurt the band because the lease plunged lower than the fair market value for leasing the land.  Since 1991, the golf club has been paying its property tax directly to the Musqueam.  However, in 2011, the Musqueam appealed a property assessment and argued that this assessment should be determined based on its “highest and best use.”

Eight years after the Court’s decision in Guerin, the Band began to exercise its taxation jurisdiction over its reserve lands, pursuant to the Musqueam Indian Band Property Assessment Bylaw.  In 1996, the Band changed the by-law to allow a property tax assessor’s right to evaluate “any restriction placed on the use of the land and improvements by the band,” rather than restrictions imposed by “an interest holder,” when finding out the property value for tax reasons.  The Band’s assessor determined that the worth of the leased land was subject to the use of the property as a golf and country club because the lease restricted the use to this purpose.  However, in 2011, the Band contended before a review board and argued that the lands ought to be deemed ‘residential.’  Further, the band argued that the lease’s use restriction was not drafted “by the band” because the lease was between the Crown and the Club.  The SCC, in a notably short decision, came to a diverging conclusion, stating that the “highest and best use” principle applies.

In the Guerin case, the BC Supreme Court stated that the assessment of leasehold interests in Crown lands must be evaluated on the actual value of the lands and improvements as if the occupier owned, rather than merely leased, them.  But this led to an unfair result: a tenant of Crown land could be required to pay municipal property tax based on a use that the lease didn’t allow.  BC legislation subsequently corrected this unfairness.

In this case, the Band argued that the property used as a golf club should be assessed based on a possible, higher value use for residential purposes – a use that the lease, binding on the property, did not permit.  This would result in a similar unfairness.  The Court applied established legal principles and concluded that the Band’s position was incorrect. The assessor was entitled to assess the golf club property based on its current use as a golf club and not some potential future use as a residential property.  There was a restriction placed “by the band” when the Crown limited the use of the leased reserve land to that of a golf club.

Although the decision is quite context-specific in its technical interpretation of the band by-law, the principles are of applicable interest beyond British Columbia.  Most notably, the Supreme Court articulated that the HABU is an essential tenet spanning Canadian assessment law.  HABU is a fundamental starting point in all property assessments in Atlantic Canada.  In the Atlantic Canada region, restrictions with respect to the use of property and those that bind that property’s title are taken into account when a property is being evaluated for tax reasons.


Given the way the SCC has come at it, Musqueam Indian Band is an extremely important decision, the repercussions of which have only begun to ruminate.  First, the judgment will craft a launching pad for further discussions between First Nations and the federal government, and some among the golf industry as well.  Second, the decision has unequivocally spawned a record amount of aboriginal law litigation, with courts interpreting textual nuances that create significant outcomes for Indigenous peoples.  Lastly, while it has not received a great deal of attention, the case is very important from a broader constitutional law perspective, as it furthers a significant trend in recent Supreme Court of Canada case law on fiduciary duty in the context of Indigenous peoples.

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