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Indigenous - Fiduciary Duty. Southwind v. Canada
In Southwind v. Canada (SCC, 2021) the Supreme Court of Canada canvassed Canada's fiduciary duty to indigenous people:A. Canada’s Fiduciary Duty to Indigenous Peoples
[54] The existence of a fiduciary duty is not in dispute in this appeal. Canada does not contest the trial judge’s determination that Canada owed a fiduciary duty to the LSFN and breached that duty. However, the specific nature of the Crown’s fiduciary duty to Indigenous Peoples, especially over reserve land, informs how equitable compensation must be assessed.
[55] The Crown’s fiduciary duty is rooted in the obligation of honourable dealing and in the overarching goal of reconciliation between the Crown and the first inhabitants of Canada (Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, [2004] 3 S.C.R. 511, at paras. 17-18). Professor Slattery describes the honour of the Crown as a “grounding postulate of Canadian constitutional law” (B. Slattery, “The Aboriginal Constitution” (2014), 67 S.C.L.R. (2d) 319, at p. 320). McLachlin C.J. explained in Haida Nation that the “process of reconciliation flows from the Crown’s duty of honourable dealing toward Aboriginal peoples, which arises in turn from the Crown’s assertion of sovereignty over an Aboriginal people and de facto control of land and resources that were formerly in the control of that people” (para. 32; see also R. v. Desautel, 2021 SCC 17, at para. 22). This is an ongoing project that seeks the “reconciliation of Aboriginal and non-Aboriginal Canadians in a mutually respectful long-term relationship” (Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, [2010] 3 S.C.R. 103, at para. 10).
[56] This Court first acknowledged a fiduciary duty in Guerin. In Guerin, Canada argued that it could not be subject to a fiduciary duty and, at best, the Crown’s control over Indigenous interests in land is a political trust which is unenforceable by the courts (p. 371). Dickson J., writing for a majority, rejected Canada’s argument. Instead, he found that Indigenous interests in land are “a pre-existing legal right not created by Royal Proclamation, by s. 18(1) of the Indian Act, or by any other executive order or legislative provision” (p. 379; see also J. T. S. McCabe, The Honour of the Crown and its Fiduciary Duties to Aboriginal Peoples (2008), at pp. 150-51). In other words, the Indigenous interest in land did not flow from the Crown; it pre-existed the Crown’s assertion of sovereignty.
[57] Through the Royal Proclamation, 1763, the Crown undertook discretionary control over these pre-existing Indigenous interests in land. The Proclamation provided: “And We do hereby strictly forbid, on Pain of our Displeasure, all our loving Subjects from making any Purchases or Settlements whatever, or taking Possession of any of the Lands above reserved, without our especial leave and Licence for that Purpose first obtained.” The Indian Act and its predecessor statutes formalized the process for setting aside reserve land and the Crown’s legal control over that land. The Crown thus undertook the “historic responsibility . . . to act on behalf of the Indians so as to protect their interests in transactions with third parties” (Guerin, at p. 383). In Guerin, this Court recognized that a fiduciary duty arose because the Crown interposed itself between Indigenous lands and those who want to lease or purchase the land, thereby exercising discretionary control over the land (pp. 383-84). The Crown has a duty that is “in the nature of a private law duty” (p. 385).
[58] In Osoyoos Indian Band v. Oliver (Town), 2001 SCC 85, [2001] 3 S.C.R. 746, Gonthier J., dissenting, but not on that point, clarified that the same fiduciary duty applies even where the reserve is not situated on traditional territory in which the First Nation may have a pre-existing legal interest. He noted: “. . . an interest in reserve lands to which no aboriginal title attaches and an interest in non-reserve lands to which aboriginal title does attach are the same with respect to the generation of a fiduciary obligation on the part of the Crown” (para. 163).
[59] Guerin set to rest the idea that the trust-like language of historic treaties, laws, and proclamations constituted a mere “political trust” unenforceable in courts. Instead, an enforceable sui generis fiduciary duty arose where the Crown asserted discretionary power over Indigenous Peoples’ specific Aboriginal interests and assumed responsibility for those interests (R. v. Sparrow, 1990 CanLII 104 (SCC), [1990] 1 S.C.R. 1075, at p. 1108). This relationship is not paternalistic in nature; it emerged in a context where the military capacities of Indigenous Peoples were strong and the Crown needed to mitigate the risk of conflict between Indigenous Peoples and settlers (Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, [2013] 1 S.C.R. 623, at para. 66; Slattery, at pp. 322 and 326).
[60] Rooted in the honour of the Crown, the Crown’s fiduciary duty exists to further a socially important relationship. It structures the role voluntarily undertaken by the Crown as the intermediary between Indigenous interests in land and the interest of settlers. Professor Rotman, in the context of fiduciary relationships generally, puts it this way: “. . . while it may appear that the fiduciary concept exists to protect beneficiaries’ interests, that effect is merely ancillary to its protection of fiduciary relationships” (L. I. Rotman, “Understanding Fiduciary Duties and Relationship Fiduciarity” (2017), 62 McGill L.J. 975, at pp. 987-88). In the context of our national history, the relationship between the Crown and Indigenous Peoples goes to the very foundation of this country and to the heart of its identity. Indeed, the need to reconcile the assertion of Crown sovereignty with the pre-existence of Indigenous Peoples, and to reconcile Indigenous and non-Indigenous Canadians is of “fundamental importance” (R. v. Van der Peet, 1996 CanLII 216 (SCC), [1996] 2 S.C.R. 507, at para. 310, per McLachlin J., dissenting, but not on this point). The honour of the Crown — and the sui generis fiduciary duty to which it gives rise — is a vital component of the relationship between the Crown and Indigenous Peoples.
[61] However, not all aspects of this relationship are fiduciary in nature (Haida Nation, at para. 18; Wewaykum Indian Band v. Canada, 2002 SCC 79, [2002] 4 S.C.R. 245, at paras. 81 and 83). The fiduciary duty does not attach to every interest of Indigenous Peoples. As Binnie J. stated in Wewaykum, “[t]he fiduciary duty imposed on the Crown does not exist at large but in relation to specific Indian interests” (para. 81). The fiduciary duty imposes heavy obligations when it does arise. The fiduciary duty may arise when the Crown exercises discretionary control over cognizable Indigenous interests or where the conditions of a private law ad hoc fiduciary relationship are met (Williams Lake Indian Band v. Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4, [2018] 1 S.C.R. 83, at para. 44; Manitoba Metis, at paras. 48-50; Wewaykum, at para. 85).
[62] The fiduciary duty itself is shaped by the context to which it applies, which means that its content varies with the nature and the importance of the right being protected (Williams Lake, at para. 55; Wewaykum, at para. 86; Manitoba Metis, at para. 49). The Crown’s control over Indigenous interests in land is at the core of the relationship between the Crown and Indigenous Peoples. Consequently, a strong fiduciary duty arises where the Crown is exercising control over a First Nation’s land. The same is true where the Crown is exercising control over Aboriginal and treaty rights that are protected under s. 35 of the Constitution Act, 1982 (Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, [2009] 1 S.C.R. 222, at para. 46).
[63] In a case involving reserve land, the sui generis nature of the interest in reserve land informs the fiduciary duty. Reserve land is not a fungible commodity. Instead, reserve land reflects the essential relationship between Indigenous Peoples and the land. In Osoyoos, Iacobucci J. wrote that Aboriginal interests in land has an “important cultural component that reflects the relationship between an aboriginal community and the land and the inherent and unique value in the land itself which is enjoyed by the community” (para. 46). The importance of the interest in reserve land is heightened by the fact that, in many cases such as this one, the reserve land was set aside as part of an obligation that arose out of treaties between the Crown and Indigenous Peoples.
[64] The fiduciary duty imposes the following obligations on the Crown: loyalty, good faith, full disclosure, and, where reserve land is involved, the protection and preservation of the First Nation’s quasi-proprietary interest from exploitation (Williams Lake, at para. 46; Wewaykum, at para. 86). The standard of care is that of a person of ordinary prudence in managing their own affairs (Williams Lake, at para. 46). In the context of a surrender of reserve land, this Court has recognized that the duty also requires that the Crown protect against improvident bargains, manage the process to advance the best interests of the First Nation, and ensure that it consents to the surrender (Blueberry River Indian Band v. Canada (Department of Indian Affairs and Northern Development), 1995 CanLII 50 (SCC), [1995] 4 S.C.R. 344, at paras. 35 and 96). In an expropriation, the obligation to ensure consent is replaced by an obligation to minimally impair the protected interest (Osoyoos, at para. 54). . Williams Lake Indian Band v. Canada (Indian Affairs and Northern Development)
In Williams Lake Indian Band v. Canada (Indian Affairs and Northern Development) (Fed CA, 2021) the Federal Court of Appeal comments on the fiduciary relationship of the federal government relating to native reserve lands:[37] Here, applicable common law and Tribunal precedents are key constraints. The SCT, in the decision under review, failed to give adequate consideration to the principles established in the applicable common law precedents governing the scope of the Crown’s fiduciary duties to Indigenous peoples in respect of reserve lands. The SCT also failed to meaningfully justify its departure from its prior decision in Tobacco Plains, which faithfully applied those principles in the context of a similar provisional reserve in British Columbia.
[38] The applicable common law principles flow from the recognition of the significant importance of land, and in particular of reserve lands, to Indigenous peoples. In Osoyoos, the Supreme Court of Canada underscored that the Aboriginal interest in reserve land is sui generis and fundamentally similar to Aboriginal title: both are inalienable except to the Crown and are rights of use and occupation that are held communally (at para. 42). This recognition gives rise to three important implications. First, traditional common law principles related to real property may not be helpful to give effect to the true purpose of a dealing related to reserve land (at para. 43). Second, a band cannot unilaterally add to or replace reserve lands, thereby highlighting the importance of such lands (at para. 45). Third, an Aboriginal interest in land is more than a fungible commodity. As noted by Justice Iacobucci, writing for the majority at paragraph 46 in Osoyoos:[…] The aboriginal interest in land will generally have an important cultural component that reflects the relationship between an aboriginal community and the land and the inherent and unique value in the land itself which is enjoyed by the community. This view flows from the fact that the legal justification for the inalienability of aboriginal interests in land is partly a function of the common law principle that settlers in colonies must derive their title from Crown grant, and partly a function of the general policy “to ensure that Indians are not dispossessed of their entitlements”: see Delgamuukw, supra, at paras. 129-31, per Lamer C.J.; Mitchell, supra, at p. 133. [39] The case law further recognizes that in light of the role it plays in respect of reserve land, the Crown owes a fiduciary duty to bands in respect of dealings with reserve land (see, for example, Guerin v. The Queen, 1984 CanLII 25 (SCC), [1984] 2 S.C.R. 335, 55 N.R. 161 [Guerin]; Semiahmoo Indian Band v. Canada (1997), 1997 CanLII 6347 (FCA), [1998] 1 F.C. 3, 148 D.L.R. (4th) 523 (F.C.A.) [Semiahmoo]; BC Tel v. Seabird Island Indian Band, 2002 FCA 288, [2003] 1 F.C. 475 [BC Tel]). Such duty includes an obligation of minimal impairment where a taking or expropriation of reserve land is undertaken for a public purpose.
[40] More specifically, once it has been determined that the land is required for a public purpose, prior to a taking, its fiduciary obligations require the Crown to assess whether other less invasive options exist. Depending on the circumstances, these could include: leasing the land or ceding an easement as opposed to a fee-simple interest, thereby providing the basis for a potential ongoing revenue stream for the band; taking a smaller portion of land than that sought, if less is needed; or providing replacement land in exchange for the land taken.
[41] In applying these principles, in Osoyoos, the Supreme Court held that all that was required for construction of a canal over reserve lands was the grant of an easement. There, a concrete irrigation canal had been constructed over part of lands that had been set aside for the creation of an Indian reserve in British Columbia. Many years later, in an attempt to formalize the interests in the canal lands, a federal Order-in-Council was enacted, in which the Governor in Council consented to the previous taking of the lands by the province. An issue arose as to the extent of the interest conveyed when the Band wished to tax the lands used for the canal. As the Order was ambiguous, the Court adopted the interpretation that impaired the Aboriginal interests as little as possible and read the Order as granting only a statutory easement to the province, thereby preserving the ability for taxation by the Band. In so determining, the Court held that no fiduciary duty attached to the decision to build the canal over the reserve, but that thereafter a fiduciary duty arose. The Court ruled that such duty requires the Crown to preserve the Aboriginal interest in the expropriated lands to the greatest extent practicable. More specifically, Justice Iacobucci, writing for the majority in Osoyoos, held that such obligation requires the Crown "“[…] wherever appropriate, to protect a sufficient Indian interest in expropriated land in order to preserve the taxation jurisdiction of the band over the land, thus ensuring a continued ability to earn income from the land”" (at para. 55).
[42] In so deciding, the Supreme Court of Canada relied on its earlier decision in Canadian Pacific Ltd. v. Paul, 1988 CanLII 104 (SCC), [1988] 2 S.C.R. 654, 89 N.R. 325, where the Court interpreted somewhat similar provisions in federal railway legislation as requiring only the grant of an easement, which it found granted a sufficient interest in land to support construction of a railway over reserve lands, yet preserved the taxation ability of the band. (See also to similar effect the decisions of this Court in Canadian Pacific Ltd v. Matsqui Indian Band (1999), 1999 CanLII 9362 (FCA), [2000] 1 F.C. 325, 176 D.L.R. (4th) 35 (F.C.A.) and BC Tel and of the SCT in Makwa Sahgaiehcan First Nation v. Her Majesty the Queen in Right of Canada, 2019 SCTC 5, 2019 CarswellNat 9939.)
[43] In a related fashion, courts in several cases have found the Crown to have breached its fiduciary duty when it consented to the surrender of portions of reserves or of interests in reserve lands by bands in an exploitative or less than minimally impairing fashion, without due regard for the ongoing Aboriginal interest in the lands. For example, the Crown was found to have breached its fiduciary duty in Guerin, when it consented to a lease of reserve lands on terms less favorable than those the band wished it to achieve, without prior consent of the band; in Blueberry River Indian Band v. Canada (Department of Indian Affairs and Northern Development), 1995 CanLII 50 (SCC), [1995] 4 S.C.R. 344, 190 N.R. 89, when it failed to prevent the alienation of sub-surface mineral rights; and in Semiahmoo, when it failed to return lands that had been surrendered but were not required for the operation of a customs facility.
[44] The case law further recognizes that the Crown may not escape its fiduciary obligations by invoking competing interests. The Supreme Court of Canada noted at paragraph 104 of Wewaykum "“[t]he Crown could not, merely by invoking competing interests, shirk its fiduciary duty”". While, in that case, the competing interests were those of another band, the principle applies equally to competing interests of a third party, like a railway, or of the Crown in right of a province. Indeed, in both Kitselas First Nation v. Canada (Minister of Indian Affairs and Northern Development), 2013 SCTC 1, 2013 CarswellNat 7705 (upheld on judicial review in Canada v. Kitselas First Nation, 2014 FCA 150, 460 N.R. 185) and Akisq’nuk First Nation v. Canada, 2020 SCTC 1, 2020 CarswellNat 1642, the uncooperative stance taken by British Columbia did not absolve Canada from breaches of its fiduciary obligations, although it could be taken into account at the compensation stage of the hearing and might lessen the damages Canada may be bound to pay where it made a claim for contribution by the province under paragraph 20(1)(i) of the SCTA.
[45] Both the Courts and the SCT have applied the foregoing principles in the context of lands provisionally reserved for indigenous peoples in British Columbia. In Wewaykum, the Supreme Court of Canada held that there was no breach of fiduciary duty in circumstances where some of the documents establishing the reserves of two Bands contained contradictory references. However, unlike the situation in the present case, in Wewaykum, the full area of the reserves that had been provisionally established was ultimately set aside for the benefit of each Band. Conversely, in Williams Lake, the Supreme Court found a breach of fiduciary duty, both prior to and following the entry of British Columbia into Confederation, arising from the failure of colonial and Dominion officials to take adequate steps to allocate its traditional village site to the Band for whom WLIR No. 1 was instead eventually established.
[46] In Tobacco Plains, a case that is factually similar to the present, the SCT held that Canada breached its fiduciary duty by failing to ensure that the interest of the Band in provisionally reserved lands was minimally impaired. There, just as in the present case, the confines of the reserve in question in British Columbia had been established by the JIRC and, prior to 1938, a portion of the provisionally reserved lands had been removed for a public purpose: there, the construction of a customs facility. However, more land had been taken from the provisional reserve than was required for the facility and the unneeded portion had not been returned to the Band. In addition, as in the present case, the land in question had been alienated and not merely leased. The Tribunal determined that it was unnecessary for it to interpret the scope of British Columbia’s authority under the BC Land Act, 1911, which was not relevant to the scope of the fiduciary duties owed by Canada. The SCT concluded that Canada had breached its fiduciary duties toward the Band in many respects, including by failing to pursue the option of leasing the land as opposed to alienating it and by failing to explore whether a smaller parcel of land might have been all that was required for the customs house.
[47] In reaching this determination, the Tribunal explained that, pursuant to Osoyoos, no fiduciary duty arises when the Crown acts in the public interest to determine that an expropriation of provisionally reserved land is required for a public purpose. However, thereafter, fiduciary obligations arise and require the Crown to "“[…] expropriate only the minimum interest that will fulfill the public purpose, thus preserving the ‘Indian interest’ in the lands to the greatest extent practicable”" (at para. 113). Contrary to what Canada maintains, this determination was in no way contingent upon the lands in question being required by Canada, as opposed to a third party, like a railway.
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