Federal Court declines review of Lax Kw’alaams house repossession dispute

The Federal Court has dismissed a challenge to the Lax Kw’alaams Band’s decision to repossess an on-reserve house after a loan default, finding that the dispute belongs in provincial superior court because it concerns private debt and property rights.

In Mather v. Lax Kw’alaams Band, 2026 FC 1240, Justice Negar Azmudeh ruled on October 7 that the Band’s role as a loan guarantor and creditor did not become a public-law function simply because the house stood on reserve land and its housing policy served community interests.

The decision dismissed Lonnie Mather’s judicial review application with costs. The court did not decide her arguments that the repossession decisions were unreasonable or procedurally unfair, or the Band’s separate argument that her application was too late.

A guaranteed loan and repeated notices

Mather, a member of the Nation, owned a house that remained incomplete and uninhabitable. In 2017, she obtained a $94,000 RBC loan to complete construction. The Band guaranteed the borrowing because the bank could not foreclose on the on-reserve house under the applicable Indian Act protection.

After Mather defaulted, the Band paid RBC $100,052.62 in September 2020 under its guarantee. There was a loan agreement between Mather and RBC and a guarantee between the Band and the bank, but no separate repayment agreement between Mather and the Band.

The Housing Department issued a repossession notice in September 2021 but did not enforce it. Further notices and discussions followed. A June 27, 2025 letter again said the Band would proceed with repossession, and Mather applied for judicial review the following month.

The parties disagreed about which notice constituted the final decision and therefore when the deadline to seek review began. That dispute remained unresolved because the court addressed its jurisdiction first.

Public housing responsibilities, private debt collection

Mather argued that this was more than an ordinary creditor dispute. She owned the house, had no signed repayment contract with the Band, and said the Band’s authority over reserve housing came from the Indian Act. She also emphasized that the housing policy was adopted after her borrowing and was intended to manage housing for the community’s benefit.

The Band and its Housing Department responded that the repossession followed a private financing transaction. The Band had paid the bank because of its guarantee and was seeking to recover that loss under its housing policy.

Justice Azmudeh applied the public-versus-private framework from Air Canada v. Toronto Port Authority. The analysis considered the nature of the dispute and decision-maker, the source of the power exercised, connections to government and statutory schemes, government direction or control, and whether public-law remedies would meaningfully address the problem.

The judge found the dispute remained anchored in the unpaid loan. The Band was acting as a creditor that had stepped into the bank’s position after honouring its guarantee. Protecting collective funds and relying on a community housing policy did not change the essential character of that debt-recovery decision.

The Housing Director’s role in this instance was comparable to a property manager administering defaults, rather than an official exercising statutory land-allocation powers. The court also found no federal government direction or control over the loan transaction or repossession decisions.

No signed repayment agreement did not settle the issue

Mather did not hold a certificate of possession for the reserve land. The court treated her right to use the land as a custom allocation, a form of permission governed by a private, contract-like relationship with the Band.

Drawing on earlier housing decisions, the judge concluded that the absence of a separate signed repayment agreement did not turn the relationship into public law. Whether analysed through implied contractual obligations or permission to occupy the land, the dispute remained one of private contract or property law.

The court distinguished an earlier case involving the Tsawout First Nation, where the challenged arrangement affected reserve land interests under a community-approved Land Code. Lax Kw’alaams had no such Land Code, and this dispute did not involve issuing, transferring or cancelling a certificate of possession.

The available remedy mattered

Justice Azmudeh also rejected the argument that judicial review was Mather’s only viable route because she lacked a signed repayment contract. The judge identified the British Columbia Supreme Court as the appropriate forum for private-law claims, including a claim for damages or other relief if repossession was carried out unlawfully.

Sending the decision back for reconsideration would not resolve the underlying debt and property issues, the court reasoned. The Federal Court could not award those private-law damages on this judicial review application.

The ruling therefore determines the forum for the dispute; it does not establish that every First Nation housing decision falls outside judicial review. The analysis turns on the particular power exercised and the relationship involved. The court awarded the respondents costs assessed under Column 2 of Tariff B, without fixing a dollar amount.