Supreme Court of Canada releases its decision interpreting the Robinson Huron and Robinson Superior Annuities provision in Ontario (Attorney General) v Restoule

Friday, July 26, 2024

The Supreme Court of Canada released a unanimous decision today in Ontario (Attorney General) v Restoule, 2024 SCC 27, finding that Canada and Ontario had breached their treaty obligations to First Nation signatories of the Robinson Huron and Robinson Superior Treaties. The Supreme Court found that Canada and Ontario failed to diligently fulfill a treaty promise to increase annual payments to the First Nation signatories, in the annuities augmentation clause, and made a declaration requiring Canada and Ontario to enter into negotiations about compensation.  

WHAT IS THE RESTOULE CASE ABOUT?

In 1850, the Anishinaabe of the northern shores of Lakes Huron and Superior entered into two treaties with the Crown: the Robinson Huron Treaty and the Robinson Superior Treaty. In the Treaties, the Crown promised Anishinaabe signatories an annuity payment that would increase if there were enough revenues from the Treaty territories to allow the Crown to do so without incurring loss. This case is about how to interpret this promise, which is sometimes called “the annuities augmentation clause”.

The last increase of the annuity was in 1875, and is currently set at $4 per person per year.

The First Nations parties to the treaties sued Canada and Ontario, saying the Crown’s failure to increase the annuity is a breach of Treaty, the Honour of the Crown, and the Crown’s fiduciary duty.

WHAT DID THE SUPREME COURT OF CANADA SAY ABOUT THE ANNUITIES AUGMENTATION CLAUSE?

The Supreme Court of Canada’s decision narrows the interpretation of the annuities augmentation clause.

The lower courts had found that the annuity had two components: a collective component, which the Crown had to increase if economic circumstances permitted; and an individual component, which the Crown had to increase up to a level of $4 per person per year, but which the Crown had a choice – discretion – about, whether to increase after the $4 cap was reached.

The Supreme Court of Canada took a different approach. The Court did not agree that there were the two distinct components to the annuity. Instead, the Supreme Court said that there was a single annuity for the First Nation and for its members.  The Court also found that the $4 per person cap referenced in the Treaty is a “soft cap” on the amount the entire annuity can be increased. The Court said that before $4 per person per year is reached, the Crown is required to increase the annuity, if it can do so without incurring loss. Once $4 per person per year is reached, there is no longer any obligation to increase the annuity. But, the Crown must exercise its discretion to determine whether to increase the annuity, and, if so, by how much. The Court said that the Crown must exercise its choice about whether and how much to increase the annuity “diligently, honourably, liberally and justly”.[1]

NEXT STEPS FOR TREATY BENEFICIARIES

For Robinson Huron and Robinson Superior Treaty beneficiaries, there are a few important things to note.

This decision does not affect the deal that has been reached between the Crown and the Robinson Huron Treaty beneficiaries. That deal, which is for $10 billion in compensation, will continue to be implemented.

For Robinson Superior Treaty beneficiaries, there will not be any payments right away.  The Court has told the Crown it has to sit down and negotiate with Robinson Superior First Nations about how it can address its past breaches of the annuities clause.

If the Crown and First Nations do not agree about this within 6 months, then the Crown will be required to come to a decision on its own about how to compensate the First Nations.

If the First Nations think the Crown did not provide enough compensation, they will have to take the Crown back to court.  

The Robinson Superior First Nations had a Phase 3 hearing about remedies before Justice Henessy already. The Supreme Court stayed (paused) Phase 3 to wait for the Supreme Court’s decision in this case. Now we have the Supreme Court’s decision. Because of what the Supreme Court decided, Justice Hennesy is not going to release her decision on Phase 3. 

If Phase 3 happens now, it will look different. Instead of a hearing where the court considers for itself how much compensation is appropriate, the starting point will be what the Crown has decided, and whether the process it followed and the amount it came to are “honourable”. 

SOME IMPORTANT PARTS OF THE DECISION

The Standard of Review for Treaty Interpretation

One big issue in dispute in the case was how appeal courts should deal with the decisions of lower courts interpreting treaties between the Crown and First Nations. This is called the “standard of review”. The Supreme Court said that factual findings of trial judges, who hear evidence from communities and witnesses directly, should be given deference and only overturned if there is a “palpable and overriding error”. But the Court said appeal courts do not need to give any deference to trial judges’ legal interpretations of the treaties, because treaties are important constitutional documents that impact all of us.[2]

It is hard to disagree with the idea that treaties are important and should be correctly interpreted. But Justice Hennessy, who was the trial judge in Restoule, conducted extensive community hearings and heard directly from community knowledge-holders about how they understood their Treaties. The appeal judges who decided this case did not go to the treaty territories or speak to First Nations beneficiaries at all. So, it is not clear that appeal judges are in a better position to figure out a “correct” interpretation of what the Treaties really mean. And it is very difficult in practice to separate the proper legal interpretation of a treaty from the factual context in which it is made.

As a result, in practice, this ruling may lead to appeal courts intervening in treaty interpretation cases in a way that discounts First Nations’ perspectives.

Treaty Interpretation Principles

The Supreme Court also took the opportunity to explain some of the principles that courts should use to interpret historic treaties. The Court expressly adopted former Chief Justice McLachlin’s dissent in R v Marshall, [1993] 3 SCR 456, which set out a two-stage approach to treaty interpretation. At the first stage, the court must look at the “words of the treaty clause” to determine their meaning, noting any ambiguities or misunderstandings. At the second stage, the court must examine the meanings which arise from the words in their historical context.

This approach prioritizes the written text of the treaty, which is troubling, because in most cases, it is the oral agreement at the treaty council, and not the written text, that better reflects what First Nations actually agreed to when they entered treaty.

For many years, one of the key principles of treaty interpretation has been that ambiguities should be interpreted in favour of First Nations signatories. The Court narrowed this principle, saying that it should only be applied once this two-stage process has been followed, if an ambiguity still remains at that point.

The Duty of Diligent Implementation of Treaty Promises

The Court found that the Crown has an obligation to diligently implement the augmentation clause in the Treaties and gave some guidance about what the duty requires.[3]

The Court rejected Ontario’s argument that the duty is only procedural – that it would be fulfilled if the Crown can show that it thought about whether to increase the $4 annuity from time to time.[4] The Court held that the duty of diligent implementation requires more: it requires the Crown to make good on its treaty promise, so First Nations signatories are not left with an empty shell of a treaty promise.[5] But the Court is a bit vague about what, specifically, this means. The Court says the Crown should consider things “like the number of treaty beneficiaries and their needs; the benefits the Crown has received from the territory and its expenses during the relevant timeframe; the wider needs of other Indigenous populations and the non-Indigenous populations of Ontario and Canada; and the principles and requirements flowing from the honour of the Crown, including its duty to diligently implement its sacred promise to share in the wealth of the land if it proved profitable.”[6] However, the Court is clear that this does not guarantee any particular result for First Nations signatories.

The Honour of the Crown and Fiduciary Duties

The Court tried to clarify the relationship between two legal principles that have been applied in this area in the past: the honour of the Crown and fiduciary duties. Previous cases have said that while the honour of the Crown is a powerful constitutional doctrine, it is not a cause of action in itself – it gives rise to different duties in different circumstances. Depending on the circumstances, the honour of the Crown can give rise to a fiduciary duty. However, the Court concluded that no fiduciary duty – either ad hoc or sui generis – arose in this case.

The trial judge had found that an ad hoc fiduciary duty arose here due to the Crown’s promise to engage in a process to determine whether it could increase the annuities without incurring loss. The Supreme Court disagreed, finding that there was no evidence that the Crown undertook to put the Huron and Superior plaintiffs first when it was implementing the augmentation clause. The Court emphasized that ad hoc fiduciary duties owed by the Crown will be rare.

A sui generis fiduciary duty requires that the Crown take discretionary control of a specific or cognizable Aboriginal interest. The plaintiffs argued their treaty rights were cognizable Aboriginal interests that could give rise to a fiduciary duty. The Court rejected this argument, stating that specific or cognizable Aboriginal interests cannot be established by treaty or legislation. They have to be independent from the Crown – like the interests First Nations have in their lands, for example. Because the annuities augmentation clause is a treaty promise, and would not exist had the Crown not exercised its treaty-making powers, the Court found it could not give rise to a sui generis fiduciary duty.

The Limitations Period for Breach of Treaty

Ontario argued that the plaintiffs’ claim for breach of treaty should be blocked by provincial limitations statutes in force in Ontario. Ontario’s arguments on this point were strained – they relied on the Court squeezing breach of treaty into statutory limitations periods set for “actions of account” or “actions on the case”. The Supreme Court rejected these arguments out of hand.  There continues to be no limitations period for breach of treaty actions in Ontario.

This part of the decision is sound. Cases for breach of treaty do not fit within the limitations periods Ontario was trying to shoehorn them into.  In addition, there are a lot of reasons why First Nations in Ontario have not brought forward court cases for breach of treaty over the last 150 years – from residential schools, to poverty, to an Indian Act regime that made it illegal for them to hire lawyers without the permission of Indian Affairs.  It is only fair that they should not be blocked from doing so now by the application of limitations statues.

Breadth of Remedies Available for Breach of Treaty and Aboriginal Rights

Before this case, it was not clear what remedies were available for breach of treaty and breach of the honour of the Crown.  In this case, the Court helpfully clarified  that “the full range of remedies” – including damages, and other coercive relief – are available when the Crown has breached Treaty rights, or the duties flowing from the honour of the Crown, or other constitutional rights.[7]

This part of the decision is important because it means that when the Crown breaches an Indigenous group’s Aboriginal or Treaty rights under s. 35 – or any constitutional right – the Indigenous group is entitled to adequate, effective, meaningful remedies which can include damages or other forms of relief.[8] The court is not limited to issuing declarations and the court must be creative in developing an appropriate remedy.[9]  

As a remedy in this case, the Court:

1. Issued a declaration that the Crown has a duty to consider from time to time whether it can increase the annuities without incurring loss. If it can, it must decide whether to increase them and by how much.

   In carrying out this duty and exercising this discretion, the Crown has to act in a manner consistent with the honour of the Crown, including the duty to diligently implement its treaty promises.

   How the Crown makes its decisions and the decisions it comes to about this can be reviewed by courts.

2. Issue a declaration that the Crown dishonorably breached the Robinson Treaties by failing to act diligently to fulfill the annuities augmentation clause.
3. Issue a declaration that the Crown is now obligated to determine an honourable amount of compensation for the Superior Treaty plaintiffs from 1875 to the present.[10] (The Crown is not required to determine the compensation for the Robinson Huron Treaty plaintiffs, because they settled their past claims with Canada and Ontario.)

In addition to this, the Court issued a direction to the Crown. The Crown must sit down and negotiate meaningfully and honourably with the Superior plaintiffs to settle the compensation amount. If the parties do not agree about the amount within 6 months of the decision being released, the Crown must exercise its discretion and determine a compensation amount.[11] If the Superior plaintiffs do not agree with the Crown’s decision, they can ask the court to review the process the Crown followed and the compensation amount they offered.[12] In reviewing the Crown’s decision, the court will be deferential to the Crown’s expertise.[13] However, the Crown must exercise its discretion honourably. If the court finds that the Crown’s process or decision was not honourable, it may send the matter back to be redetermined by the Crown, or set the amount to be paid by the Crown.[14] 

[1] Ontario (Attorney General) v Restoule, 2024 SCC 27, at para. 197 (“Restoule”).

[2] Restoule, at paras. 104-113.

[3] Restoule, at para. 248.

[4] Restoule, at paras. 260, 262.

[5] Restoule, at paras. 254, 258.

[6] Restoule, at para. 197.

[7] Restoule, at paras. 276, 288.

[8] Restoule, at para. 275.

[9] Restoule, at paras. 276-277.

[10] Restoule, at para. 304.

[11] Restoule, at para. 305.

[12] Restoule, at para. 307.

[13] Restoule, at para. 308.

[14] Restoule, at para. 310.