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Crown Liability - Immunity (2). Chippewas of Nawash Unceded First Nation v. Canada (Attorney General)
In Chippewas of Nawash Unceded First Nation v. Canada (Attorney General) (Ont CA, 2023) the Court of Appeal considers whether Ontario was Crown-immune from a claim of breach of fiduciary duty:(b) Analysis
[226] Ontario argues that it is not liable for any breach of fiduciary duty in this case because “no legislation has clearly and unequivocally removed Crown immunity for claims of breach of fiduciary duty”. In support of its position, Ontario cites Canada v. Thouin, 2017 SCC 46, [2017] 2 S.C.R. 184, in which the court stated, at para. 1, that “Crown immunity is deeply entrenched in our law…. [T]o override this immunity … requires clear and unequivocal legislative language.” Ontario contends that any fundamental reform to the law of Crown immunity is for the legislature to make, citing Mitchell v. Peguis Indian Band, 1990 CanLII 117 (SCC), [1990] 2 S.C.R. 85, per Wilson J., at pp. 120-21. Because the legislature has not yet done so, Ontario submits that the Crown remains immune from claims for breach of fiduciary duty.
[227] At issue in Thouin was whether the Crown in right of Canada was immune from discovery in civil proceedings to which it was not a party. Section 27 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, provides: “Except as otherwise provided by this Act or the regulations, the rules of practice and procedure of the court in which proceedings are taken apply in those proceedings.” The Supreme Court noted, at para. 27, that these words “do not show a clear and explicit intention to bind the Crown in all proceedings in which it is involved” but rather only relate to those proceedings in which the Crown is a party. As a result, the court concluded, at para. 25, that s. 27 did “not indicate a clear and unequivocal intention on Parliament’s part to lift the Crown’s immunity by requiring the Crown to submit to discovery in proceedings in which it is not a party.”
[228] Ontario acknowledges that the enactment of the PACA changed the law with respect to Crown immunity in the province, but argues that the legislation did not remove its immunity because a claim for breach of fiduciary duty could not have been enforced by petition of right prior to September 1, 1963. The same argument has been made – and rejected – in several cases.
[229] Most notably, in Slark, Cullity J. emphatically rejected the argument that the provincial Crown is immune from liability for all claims for breaches of fiduciary duty that arose before September 1, 1963, when the PACA came into force. In Slark, the plaintiffs sought certification for a class action case against the Crown for abuse suffered by them while they were housed in Huronia Regional Centre, a residential facility for individuals with developmental disabilities. In defending the action, Ontario argued that the Crown could not be liable for breaches of fiduciary duty occurring before September 1963, on two bases: first, the law did not recognize claims for breach of fiduciary duty against the Crown before September 1963; and second, the PACA did not purport to create a cause of action against the Crown for breaches of fiduciary duty occurring before September 1963.
[230] Cullity J. rejected Ontario’s argument. He began his analysis by considering the wording of the relevant provisions of the PACA, particularly ss. 3, 28 and 29(1).[10] Those sections provide:3. Except as provided in section 29, a claim against the Crown that, if this Act had not been passed, might be enforced by petition of right, subject to the grant of a fiat by the Lieutenant Governor, may be enforced as of right by proceedings against the Crown in accordance with this Act without the grant of a fiat by the Lieutenant Governor.
28. No proceedings shall be brought against the Crown under this Act in respect of any act or omission, transaction, matter or thing occurring or existing before the first day of September, 1963.
29. (1) A claim against the Crown existing on the first day of September, 1963 that, if this Act had not been passed, might have been enforced by petition of right may be proceeded with by petition of right subject to the grant of a fiat by the Lieutenant Governor as if this Act had not been passed.[11] [231] Based on the language of s. 29(1), Cullity J. asked “whether the claims for declarations in respect of breaches of fiduciary duty would have been permitted if [the PACA] had not been enacted”: Slark, at para. 118. He noted that the PACA does not specifically mention claims for breach of fiduciary duty, and as such, they could only be actionable against the Crown if they fell under the broad umbrella of a claim that “could have been enforced by petition of right if [the PACA] had not been enacted”: at para. 77.
[232] The keystone to Cullity J.’s analysis was his holding that it was not necessary “to treat the evolution of the law governing petitions of right as frozen at the end of August 1963, and to ignore developments in the equitable jurisdiction of the court since that time”: Slark, at para. 118. Instead of considering whether the claim would have been actionable by petition of right on the day the PACA was enacted, he assessed whether the claim would be actionable in a hypothetical world in which the PACA had never been passed at all: at para. 121. He relied on the text of s. 29(1): “A claim against the Crown existing on the first day of September, 1963 that, if this Act had not been passed, might have been enforced by petition of right may be proceeded with by petition of right subject to the grant of a fiat” (emphasis added).
[233] Noting that claims for breach of fiduciary duty against the Crown after September 1963 emerged despite the lack of statutory authorization in the PACA, Cullity J. thought it likely that the common law would have evolved in such a manner that, absent the PACA, claims for breach of fiduciary duty would have become actionable against the Crown by petition of right: Slark, at para. 123. Accordingly, he held that claims for breaches of fiduciary duties occurring before 1963 are now actionable with a petition of right and therefore captured by s. 29(1) of the PACA: Slark, at para. 125.
[234] In reaching this conclusion, Cullity J. rejected an approach adopted in Richard v. British Columbia, 2009 BCCA 185, 93 B.C.L.R. (4th) 487, leave to appeal refused, [2009] S.C.C.A. No. 274, and other British Columbian authorities that more closely aligns with the approach Ontario asks us to adopt in this case. He reasoned, at para. 82, that the cases from British Columbia are not easily reconciled with the language of the PACA. Ontario’s legislation asks whether the claim would be actionable if the PACA had not been passed, whereas British Columbia’s Crown Proceedings Act, S.B.C. 1974, c. 24, asks whether a claim existed prior to its enactment. Therefore, British Columbian courts have instead asked the point in time question as to whether the claim was actionable before the legislation was enacted, leaving no prospect for further development in the common law of Crown immunity. Cullity J. determined that Ontario’s PACA was more disposed to the counterfactual approach to actionability, rather than British Columbia’s point-in-time approach.
[235] Cullity J. held, at paras. 117-18, that it would be artificial to ask how equitable claims that were effectively unknown to the law before Guerin would have been treated if they had been considered by a court before 1963; instead, the correct question is whether a court today would recognize an equitable claim against the Crown for breach of fiduciary duty had the PACA not been passed. He found it “inconceivable that the petition of right procedure … would not have been adapted to accommodate judicial recognition of the new fiduciary duties of the Crown” if the PACA had never been enacted: at para. 124.
[236] We note the Divisional Court denied leave on Slark, seeing “no reason to doubt the correctness of [Cullity J.’s] decision”: 2010 ONSC 6131, 6 C.P.C. (7th) 221, at para. 31 (Div. Ct.).
[237] We further note that Cullity J., sitting as a judge of the Divisional Court, took a similar approach in his dissent in the earlier decision of Cloud v. Canada (Attorney General) (2003), 2003 CanLII 72353 (ON SCDC), 65 O.R. (3d) 492 (Div. Ct.), rev’d (2004), 2004 CanLII 45444 (ON CA), 73 O.R (3d) 401 (C.A.), leave to appeal refused, [2005] S.C.C.A. No. 50. In Cloud, former residents of an Aboriginal residential school appealed the dismissal of their certification motion for a class action against the Crown in right of Canada to the Divisional Court, which upheld the dismissal by majority. On further appeal, this court certified the action, including a claim for breach of fiduciary duty which included conduct pre-dating the enactment of the federal Crown Liability and Proceedings Act, S.C. 1952-53, c. 30, in 1953. Goudge J.A. noted, at para. 24, that Cullity J., in his dissenting reasons, had “found that the claim against the Crown for breach of fiduciary duty is a claim in equity that could have been brought against the Crown in the Exchequer Court before May 14, 1953, and can therefore now be brought in the Superior Court even if it arises before that date.” At para. 6, Goudge J.A. stated that he agreed with Cullity J.’s conclusion, and “in large measure, with his analysis.”
[238] Indeed, a number of cases have cited favourably to Slark and concluded the Crown may be held liable for breaches of fiduciary duty, including Seed v. Ontario, 2012 ONSC 2681, 31 C.P.C. (7th) 76, Templin v. Ontario, 2016 ONSC 7853, 6 C.P.C. (8th) 410, and Restoule v. Canada (Attorney General), 2020 ONSC 3932, 452 D.L.R. (4th) 604 (“Restoule No. 2”), aff’d 2021 ONCA 779, 466 D.L.R. (4th) 1, leave to appeal granted, [2022] S.C.C.A. No. 5. We review the context of each case.
[239] In Seed, the plaintiffs were seeking certification of a class action against the Crown for abuse while they were residents in a residential school for the visually impaired. Horkins J. noted one of Ontario’s objections, at para. 79, that “[t]here is no cause of action for breach of fiduciary duty prior to 1963.” She explained that Ontario was raising the same arguments as it did in Slark, at para. 80. She held, at para. 81, that “there is no principled reason to disagree with the result in Slark.”
[240] In Templin, Belobaba J. certified a class action against Ontario for abuse suffered by the plaintiffs at the Children’s Psychiatric Research Institute. He noted, at para. 6: “The action alleges negligence and breach of fiduciary duty in the operation and management of an institution operated directly by the provincial Crown. These are the same causes of action that were approved by the Court of Appeal for Ontario in Cloud, and by [the Superior Court] in Slark” (citations omitted).
[241] Restoule No. 2 concerned fiduciary breach claims arising from breach of a treaty. Hennessy J. noted Ontario’s concession, at para. 12: “Ontario concedes that it is liable for breaches of fiduciary duty based on facts in existence post September 1, 1963 and submits that it is not relying upon a defence of Crown immunity for any breach of fiduciary duty post September 1, 1963.”
[242] She then observed, at para. 42, that Ontario put forward the same arguments as in Slark and Seed and as Canada did in Cloud. She accepted the analysis in Slark. She rejected, at para. 56, Ontario’s argument that “the test on certification is so different from the test for summary judgment that the reasoning in Slark and Seed should not be applied in this case.” She cited, at para. 58, the principles of stare decisis and comity, both horizontal and vertical, and concluded, at para. 59, that the Crown “has shown no good basis for their claim that the decision in Slark is plainly wrong, particularly in light of the appellate decisions in Cloud and Carvery [v. Nova Scotia (Attorney General), 2015 NSSC 199, 364 N.S.R. (2d) 63, at paras. 59-61, aff’d 2016 NSCA 21, 371 N.S.R. (2d) 296] which adopt the reasoning” in Slark. Hennessy J.’s respect for stare decisis and comity was reinforced by the Supreme Court in R. v. Sullivan, 2022 SCC 19, 472 D.L.R. (4th) 521, at para. 65.
[243] Ontario nevertheless points to the British Columbia Court of Appeal’s decision in Richard, this court’s decision in Barker v. Barker, 2022 ONCA 567, 162 O.R. (3d) 337, leave to appeal refused, [2022] S.C.C.A. No. 368, and the Supreme Court’s decision in Rudolph Wolff & Co. v. Canada, 1990 CanLII 139 (SCC), [1990] 1 S.C.R. 695, to substantiate its argument. Cullity J. explained in Slark why Richard is not apposite based on the differences in each province’s legislation. We agree.
[244] We also do not think that Barker assists Ontario. In Barker, at para. 91, on the basis that “Guerin is fatal to Ontario’s position”, this court did not accept Ontario’s invitation to review Cullity J.’s decision in Slark. This court took Ontario’s argument at its highest, noting, at para. 93: “But as Ontario’s argument concedes, Guerin entails the conclusion that where legislation imposes an obligation that gives rise to duties of a fiduciary nature on the Crown, it must be taken as waiving Crown immunity for breach of that obligation.” This court found that the imposition of a duty on Ontario by the Mental Health Act, R.S.O. 1990, c. M.7, was sufficient to satisfy any requirement in Thouin for clear and unequivocal language to override Crown immunity, on the basis, at para. 94, that it would “make little sense to conclude that the legislation created that obligation but left the fiduciary immune from the consequences of its breach.” The Barker court left open for another day how Slark might factor into the analysis.
[245] Ontario also relies on Rudolph Wolff, which stands for the proposition that the general jurisdiction conferred on Canadian courts to hear claims against the federal Crown comes from the enactment of statutes such as the Petition of Right Act, S.C. 1875, c. 12, and subsequent federal legislation, and that only Parliament can enact such statutes with respect to the federal Crown. Rudolph Wolff does not address the availability of remedies against the Crown. It does not provide guidance on how to interpret Crown liability legislation, let alone the specific language addressed in Slark.
[246] We agree with Cullity J.’s analysis in Slark and reject Ontario’s argument that it is immune from claims for breach of fiduciary duty in this case, and that reform to the law of Crown immunity should be entirely left to the legislature. The common law still has a role to play, as Slark illustrates.
[247] We accordingly disagree with Ontario that the correct way to interpret the PACA is to consider the state of the law as it was prior to September 1, 1963 and ask whether a claim for fiduciary duty might have been enforced, at that time, by petition of right. Section 29(1) of the PACA permits claims against the Crown that: (1) existed on September 1, 1963; and (2) might have been enforced by petition of right if the PACA had not been passed. Section 28 maintains a bar to such claims which do not meet these conditions. In S.M. v. Ontario (2003), 2003 CanLII 22812 (ON CA), 67 O.R. (3d) 97 (C.A.), at para. 47, this court held that the word “claim” in s. 29(1) does not refer to a cause of action per se, but rather to the basis for the existence of a cause of action. The events giving rise to the claim for breach of fiduciary duty in this case obviously pre-date September 1963. Like Cullity J., however, we conclude that had the PACA not been enacted, the petition of right procedure would have evolved to account for the actionability of the Crown’s fiduciary obligations.
[248] We accordingly conclude that Ontario is not immune from claims for breach of fiduciary duty in this case. We do not consider Thouin to be dispositive of Ontario’s argument for four reasons. First, Thouin focused on an interpretive approach to statutory language in the federal legislation. The statutory language at issue in this case – s. 29(1) of the 1970 consolidation of the PACA – is phrased and framed quite differently, and opens up the prospect of further common law development in the area of Crown immunity, as Cullity J. explained in Slark. Second, no argument was addressed to the Supreme Court in Thouin about the way in which the common law on Crown immunity might have evolved, as noted in this court’s decision in Cloud or in the numerous decisions following Slark. Third, the issue in Thouin was procedural, not substantive. Finally, Thouin did not concern fiduciary duties in an Aboriginal context.
[249] We take seriously the Supreme Court’s statement in Mikisew Cree, at para. 33, that reconciliation “is the ‘fundamental objective of the modern law of aboriginal and treaty rights’” (citing Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 S.C.R. 388, at para. 1) and that “[t]he purpose of s. 35 … is to facilitate this reconciliation”. Ontario asks us to ignore the principles behind Crown immunity and to keep to a technical approach, which is quite inconsistent with the honour of the Crown, in order to dismiss SON’s fiduciary breach claim on the ground of Crown immunity. It would be wrong to apply unyielding and regressive procedural bars to Aboriginal claims for breach of fiduciary duty. Doing so would not further reconciliation.
[250] If SON’s claim for damages for breach of the Crown’s fiduciary duty respecting Treaty 45 ½ were successful, then, in our view, Ontario would not be able to rely on the principles of Crown immunity as a full defence. . Chippewas of Nawash Unceded First Nation v. Canada (Attorney General)
In Chippewas of Nawash Unceded First Nation v. Canada (Attorney General) (Ont CA, 2023) the Court of Appeal usefully considers the history of crown immunity:(a) The history of Crown immunity
[215] Historically, Crown immunity from civil suits did not originate in policy or statute, but in the common law derived from medieval civil procedure. The feudal principle was that a lord could not be sued in his own court, and, since no court was higher than the King’s own court, he could not be sued at all: Peter Hogg, Wade Wright & Patrick Monahan, Liability of the Crown, 4th ed. (Toronto: Carswell, 2011), at p. 5. The maxim was that “The King hath no lord but God”. This, in turn, evolved into the more commonly cited but misleading maxim, “the King can do no wrong”: Sir William Wade, “The Crown, Ministers and Officials: Legal Status and Liability” in Maurice Sunkin & Sebastian Payne, eds., The Nature of the Crown: A Legal and Political Analysis (Oxford: Oxford University Press, 1999), at p. 24.
[216] There were limitations on Crown immunity. The King enjoyed personal immunity and the Crown could not be held vicariously liable for wrongs committed by its agents and ministers, but those who committed wrongful acts while acting for the Crown could not avail themselves of the protection of the Crown’s immunity: see “Crown Practice” in Halsbury’s Laws of England, 2nd ed., vol. 9 (London: Butterworths & Co., 1933), at p. 691. This is the source of the most notable limitation on Crown immunity.
[217] To compensate for the King’s procedural but non-substantive immunity, the procedural mechanism of the ‘petition of right’ emerged: Hogg et al., at p. 5. The petition of right allowed certain claims to proceed against the King upon receiving his fiat, primarily for the recovery of property, but it notably excluded tort claims: see Hogg et al., at pp. 6-7.
[218] The proper remedy where a person committed a tort while acting for the Crown was to sue the individual personally, because the Crown could not legally have authorized the conduct: see Halsbury’s Laws of England, at p. 691. For tort claims and other claims for which a petition of right was not available, the historical practice was that the Crown servant – including senior officials such as Cabinet Ministers – would be sued personally. Since the King could do no wrong, the Crown could not have authorized the wrongdoing, so the minister or servant was seen as having acted outside of his authority: see Feather v. The Queen (1865), 122 E.R. 1191 (K.B.), at p. 1205. In situations where it would be difficult to identify one individual responsible for the breach, the Crown would nominate an individual to serve as defendant, and the treasury would compensate for the individual defendant’s potential lack of funds, so as not to leave a plaintiff without a remedy: see Matthews v. Ministry of Defence, [2003] UKHL 4, [2003] 1 A.C. 1163, at para. 46, per Lord Hope of Craighead.
[219] Lord Woolf explained in M. v. Home Office, [1993] UKHL 5, [1994] 1 A.C. 377, at p. 410, that, in practice, this system allowed plaintiffs to pursue claims and receive compensation almost as though the Crown were liable:The difficulty which a plaintiff might have in identifying the appropriate servant of the Crown who was the tortfeasor in practice was overcome by the Crown nominating the individual responsible for the damage and the lack of resources of the defendant did not cause problems since the Treasury would make an ex gratia payment of compensation if it was a case where, but for Crown immunity, the Crown would be vicariously liable. In such proceedings, if it was appropriate for an injunction to be granted, there was no reason why this should not be done. [220] Further, English authorities suggest that Crown immunity was limited to causes of action, and, since declaratory relief did not require a cause of action, a party could seek a declaration against the Crown notwithstanding the Crown’s immunity: see Dyson v. Attorney-General, [1911] 1 K.B. 410 (Eng. & Wales C.A.). The fact that the Crown would pay in response to a declaration did not have the effect of converting the case into a claim for damages.
[221] It is not our intention to traverse in more detail the history that Cullity J. covered so well in his lengthy and scholarly discussion in his seminal decision of Slark (Litigation Guardian of) v. Ontario, 2010 ONSC 1726, 6 C.P.C. (7th) 168, leave to appeal refused, 2010 ONSC 6131, 6 C.P.C. (7th) 221 (Div. Ct.). Cullity J. reviewed, at paras. 98-114, the origins and evolution of the petition of right procedure in England and Canada. He noted that “it is apparent that, prior to the enactment of [the Proceedings Against the Crown Act, 1962-63, S.O. 1962-63, c. 109], the law governing the scope of declaratory relief against the Crown was continuing to evolve”: at para. 115. He also noted the “gradual erosion” of the maxim that the King can do no wrong, an erosion which was “vastly accelerated by the enactment of [the Proceedings Against the Crown Act]”: Slark, at para. 116.
[222] In particular, Cullity J. noted, at para. 102, the abandonment of the distinction between direct and vicarious liability:[T]he statutes have in the past been interpreted as - subject to specific exceptions - excluding the direct, as distinct from the vicarious, liability of the Crown in tort. To this extent they preserved, or reflected, the rule that the king can do no wrong. The relevance of the distinction - and, consequentially, the continuing influence of the maxim for this purpose - was, however, emphatically rejected by the majority of the Supreme Court of Canada in Swinamer v. Nova Scotia, 1994 CanLII 122 (SCC), [1994] 1 S.C.R. 445 where Cory J. stated (at para. 29):The arguments of the Crown [in favour of immunity from direct liability] are regressive and to accept them would severely restrict the ability of injured persons to claim against the Crown. [223] Speaking of the Dyson procedure as an exception to the operation of Crown immunity, because it permitted an action for a declaration against the Crown without the need for a petition of right, Cullity J. noted, at para 115:I believe it is apparent that, prior to the enactment of [the Proceedings Against the Crown Act], the law governing the scope of declaratory relief against the Crown was continuing to evolve in accordance with the principle mentioned by [Sir William] Holdsworth [in A History of English Law, vol. 9 (London: Methuen & Co. Ltd., 1926), at p. 41, that a petition of right “should be available against the crown where the subject has a cause of action against a fellow subject”] - and that neither the maxim that the king can do no wrong nor the inability to enforce judgments by coercive process against the Crown were sufficient in all cases to preclude declarations that a plaintiff was entitled to damages, compensation or restitution from the Crown. [224] Statutory and common law reforms in both Canada and England have gradually moved away from Crown immunity, in recognition of the problem it poses to the rule of law. As the Ontario Law Reform Commission wrote in Report on the Liability of the Crown (Toronto: Ontario Law Reform Commission, 1989), at p. 6:In our view, the answer to the question why the government should relinquish many of the advantages that it now enjoys is very simple, yet compelling. It is the right and fair thing for good government to do…. The preservation of the Crown’s minor tactical advantages in its dealings with ordinary persons would be a trivial and unworthy reason to set against the improvement in the justice of our legal system that this report proposes. [225] This policy perspective underpins the Proceedings Against the Crown Act, 1962-1963, S.O. 1962-63, c. 109 (“PACA”).[9] The PACA, which was originally enacted in 1963, eliminated some of the immunities enjoyed by the Crown while preserving both immunity from action and the petition of right regime with respect to claims that existed on September 1, 1963.
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