SCC says failure to create reserve a breach of fiduciary duty in divided decision

Aboriginal Law | Fiduciary Duty

By Krista Nerland and Senwung Luk

This morning, the Supreme Court of Canada released its decision in Williams Lake Indian Band v. Canada, a case about the Crown’s fiduciary obligations to First Nations during the reserve creation process.  The case also addressed whether and when Canada can be held liable under the Specific Claims Tribunal Act for breaches of fiduciary duty by the pre-confederation colony of British Columbia.

The decision is a doozy – over 200 paragraphs and three different opinions, splitting primarily on how to read the Tribunal’s reasons and how much deference is due to the Tribunal’s conclusion that Canada is liable for the breaches of the colony of British Columbia.  Although the Court ultimately found for the Williams Lake Indian Band and restored the decision of the Specific Claims Tribunal, the decision offers mixed bag when it comes to the principles of fiduciary law.  

OKT’s Senwung Luk, Cathy Guirguis and Krista Nerland were proud to represent the Assembly of Manitoba Chiefs in their intervention in this case.

Background:

Williams Lake Indian Band, part of the Secewepemc Nation, traditionally held and used a large territory, including 1960 acres of village land known as Yucwt at the foot of Williams Lake, in what is now the City of Williams Lake in British Columbia.   

The issues that are at the heart of this case arose in the colony of British Columbia before it joined confederation. At the time, settlers were clamouring for First Nations lands.  Several First Nations considered waging war to protect themselves, but they were assured by the colonial Governor that their land would be protected from the influx of settlers. The colony put in place a policy that settlers could not pre-empt First Nations villages and cultivated lands, which would instead be set aside as reserves.

For the Williams Lake Indian Band, this promise wasn’t worth much. The Crown failed to take any steps to protect or set aside Yucwt, even though colonial officials were aware that the land was being overtaken. The Band was left impoverished and was forced to relocate to a nearby mission.   

Twenty years later, after British Columbia joined confederation, the Crown in Right of Canada allocated the Band a different piece of land at the other side of the lake.  Crown officials acknowledged that the pre‑emptions had been a mistake but refused to interfere with settlers’ occupation of Yucwt.

The Specific Claims Tribunal found the Crown’s failure to take steps to set aside Yucwt was a breach of its fiduciary duty, contrary to the Specific Claims Tribunal Act.  The Federal Court of Appeal reversed the Tribunal’s decision, concluding that any breach of fiduciary duty that may have occurred was fully addressed when the Crown set aside the alternative land some twenty years later.

What did the Supreme Court of Canada say?

The Court split three ways.

The majority (5 judges) gave a lot of deference to the Tribunal’s decision. Although the Tribunal’s reasoning was brief on some issues, the Court noted that it is mandated to address historic grievances efficiently and it has specialized expertise in this kind of historic claim.  Therefore, its conclusions and reasoning are entitled to deference  [31-37].

The Court also concluded the Tribunal’s decision was reasonable: both the colony and Canada had breached their fiduciary obligations to the First Nation [39-42].  

Williams Lake Indian Band had a cognizable interest in Yucwt [65], which was anchored in collective occupation and use, and was recognized by colonial officials at the time [68].  A fiduciary duty arose in relation to Yucwt at the earliest stage of the reserve creation process  – where the Crown was deciding which lands should be set aside [66]. The failure of colonial officials to “take even these most basic steps” to determine which lands should be set aside was a breach of the Crown’s fiduciary duty [57].

The majority also upheld the Tribunal’s conclusion that there was a second breach after confederation, when Crown officials refused to consider interfering with the settlers’ pre-empted plots in Yucwt, at the First Nation’s expense [72-82].  The First Nation had a profound tangible, practical and cultural connection to this land, and its best interest was to have this specific tract set aside as a reserve  [81-88].   The key question was therefore whether the Crown met the fiduciary standard in relation to this specific tract, not whether the Crown acted in the band’s best interests more generally [89, 94].   The Tribunal reasonably concluded that the Crown breached its duty when it failed to act with good faith or prudence to take steps to protect and restore the First Nation’s interest in Yucwt [101].

Finally, the majority held that it was reasonable for the Tribunal to conclude that Canada could be held liable for the breaches of fiduciary duty by the colony, if it would have been liable for the same conduct itself after confederation [113, 118]. 

The concurring judgement (2 judges) split primarily over the standard of review – that is, how intrusive an appeal Court should be in reviewing the decision of the Specific Claims Tribunal. It would have sent the matter back to the Tribunal for reconsideration of whether Canada could be held liable for a breach of fiduciary duty by the colony before British Columbia joined Confederation.

The dissent (2 judges) agreed with the majority that the colony had breached its fiduciary duties to the Williams Lake Indian Band in failing to take steps to aside Yucwt as a reserve, but would have held that Canada did not breach any duties when it refused to disrupt the pre-empting settlers and instead set aside a different parcel of land.  According to the dissent, there was no basis for concluding this was not in the First Nation’s best interests, particularly in light of Canada’s limited power in the reserve creation process [165-173] . The dissent also concluded Canada could not be held liable under The Specific Claims Tribunal Act for the breaches of the colony since it had not assumed such responsibility in the the document through which British Columbia entered into confederation, known as he Terms of Union  [179-198].

A few implications

There a few big takeaways from this morning’s decision.

First, the good news.

A strong majority of the Court understood that First Nations lands are special. They are not interchangeable with just any other plot of land the Crown decides to set aside for a First Nation. Different lands, even where they all fall within a First Nation’s territory, are distinct.  When the Crown owes a fiduciary duty in relation to land, it owes that duty in relation to a specific tract, and not at large.  This means that offering replacement lands, as the Crown did here, will not be enough to “cure” a breach of fiduciary duty, though it may affect the amount of compensation a First Nation can get for that breach. For First Nations who have been pushed off their lands by settlement or flooding, this part of the ruling is good news.  

In addition, First Nations who go before the Specific Claims Tribunal can expect to be able to hold Canada to account for wrongs committed prior to confederation, where Canada would be liable for those wrongs if it committed them after confederation.  Canada’s liability is not exhausted by the Terms of Union.  This, too, is good news, particularly for First Nations in British Columbia, many of whom suffered greatly at the hands of the colony.

Finally,  the majority places at least some emphasis on Indigenous perspectives in interpreting the Specific Claims Tribunal Act.  The expectation of Indigenous peoples that breaches of the Crown’s obligations be redressed, notwithstanding its shape-shifting at confederation, was part of the reason the Court concluded that Canada could be held liable for the colony’s breaches [130].  This is perfectly appropriate, especially in the context of legislation that deals with redressing historic wrongs against Indigenous peoples.

Now for the bad news.  The majority’s treatment of “competing interests” is concerning.  Starting with Wewaykum v Canada, 2002 SCC 79, the Supreme Court has signalled that the Crown’s fiduciary duty to First Nations  –  including the duty of loyalty, which requires the fiduciary to act in their beneficiary’s best interests and for no other purpose  –  may be weakened because the Crown “wears many hats and represents many interests.” [96].  This is out of step with basic principles of fiduciary law (not to mention principles of fairness).  But in Wewaykum this was somewhat more justifiable, because the lands at issue were not the First Nations’ traditional lands, and the land had not been set aside as a reserve yet.  So the Court decided that the First Nations’ interest in those lands was much less profound – that they were newcomers, like the settlers.  

In this case, we see the “Crown wears many hats” principle applied even where the land at issue is land a First Nation has occupied for many generations and to which it has a deep cultural connection.   The majority says, somewhat flippantly, that “ the Crown’s fiduciary duty is limited by its obligation to “have regard to the interest of all affected parties” and to be “even-handed among competing beneficiaries.” [55]. It goes onto note that,

Fulfilling this flexible equitable obligation entails consideration of the nature and importance of the beneficiary’s interest and competing interests; although the Crown cannot ignore the reality of conflicting demands, neither does the existence of such demands absolve it altogether of its fiduciary duty in its efforts to reconcile them fairly [55].

It is inconsistent with the basic principles of fiduciary law to hold the Crown to the relatively low standard of “fair reconciliation” of settler and First Nations interests in relation to what everyone agreed were the First Nation’s own lands.   This is particularly vexing because the settlers in this case had broken colonial law, or at least colonial policy by pre-empting the First Nation’s land.  

However, it is important to note that even with the wiggle room that the Court gave the Crown, it still found the Crown liable to the Williams Lake Indian Band. In the past, the Crown had used its “competing obligations” to argue its way out of its obligations to protect Indigenous lands and property. This case at least signals there is a limit to how much the Crown can excuse its conduct by citing “competing obligations”.  It also recognizes that the fiduciary duty may be more robust, and competing interests less relevant, where the First Nation’s interest at stake is particularly profound [69].  

Finally, this decision is a bit wiggly as a precedent because the majority rested so much on deference to the Tribunal  [see, for example, at paragraphs 121-122].  Arguably, if the Tribunal came to a different conclusion on key issues in the case, that might still have been found to be reasonable and defensible.  So does that mean that if the Tribunal  or a court could take another approach to the same question in another circumstance?   There is room to make this argument.

Zooming out, it is important to remember that this case is about a Nation that was physically displaced from the land on which it had lived for generations in a manner that was illegal, even under colonial law. They lost the ability to earn a livelihood for almost 20 years, when the Crown asked them to move to a different location, essentially telling them to take it or leave it. When this injustice was finally addressed by the Specific Claims Tribunal almost 150 years later, the federal government took the First Nation to court, arguing that its rights were never breached. One would have thought, since we are supposedly in an “age of reconciliation”, that the federal government might have abandoned its efforts to deny justice to the Williams Lake Band after the Tribunal’s ruling. It is a good thing that the Supreme Court saw the injustice of the situation and decided in favour of the First Nation.