Over the past 15 years, most of the Supreme Court of Canada’s decisions respecting Indigenous Peoples in Canada have revolved around the Crown’s duty of consultation. The Crown, however, also owes Indigenous peoples another duty: a fiduciary duty. On February 2, 2018 the Supreme Court of Canada reviewed the elements of the Crown’s fiduciary duty to Indigenous Peoples in the context of a claim based on Crown conduct that occurred in the middle of the 19^th century. In Williams Lake Indian Band v. Canada, the Supreme Court of Canada confirmed that in 1858, the Crown owed a fiduciary obligation to the Williams Lake Indian Band and breached that duty. The decision is a salutary reminder that governments cannot restrict their diligence to the existence of Aboriginal title or rights and the duty of consultation. They must also consider whether, in exercising discretionary powers under the law, they have fiduciary obligations to Indigenous peoples and if so, they are fulfilling that duty.

The Current Relevance

The Crown’s duty of consultation and its fiduciary duty to Indigenous peoples are two separate legal obligations. The fiduciary duty has some characteristics, such as good faith and full disclosure, that are also aspects of the duty of consultation. The two duties may even overlap. But they are not the same. There are three principal differences. First, the duty of consultation focuses primarily on process issues; the fiduciary duty is a more direct duty requiring the Crown to exercise its discretionary power to a legally prescribed standard of conduct. Second, there is also a specific beneficiary of the fiduciary duty, namely an Indigenous community with a specific or cognizable interest. Third, the consequences of breach are different. If the Crown fails to meet the fiduciary standard of conduct, a tribunal or court may set its decision aside, and the Crown may be obliged to pay compensation for its breach of the fiduciary duty. In contrast, if the Crown breaches the duty of consultation, the remedy is usually an order quashing an approval or permit.

Of what relevance today is a case on the Crown’s failure to discharge its fiduciary duty in the 19^th century? A great deal: the existence and fulfilment of a fiduciary duty might affect how governments deal with project assessments and approvals:

• If a project proponent must seek a governmental decision (such as by way of an assessment or approval in the form of a permit or license) to move forward with the project, that decision often entails the government’s exercise of discretionary power under the law.
• If that exercise of a discretionary power under the law will affect a specific Aboriginal right, the governmental actor may be under a fiduciary duty to the relevant Indigenous community: a legal obligation to act in that Indigenous community’s best interest – not those of the government, the project proponent, or any other.
• If a fiduciary duty exists, the governmental authority must exercise its discretionary control in accordance with the equitable standards that require loyalty, good faith and full disclosure in relation to that Indigenous community, and in its pursuit of their interests, must exercise the care of a person of ordinary prudence in managing their own affairs. And that duty might very well go far beyond the duty to consult.

One recent example of the impact of the Crown’s breach of fiduciary duty is the 2017 decision of the Federal Court of Appeal in Coldwater Indian Band v. Canada (Indian and Northern Affairs) in which the Court set aside a decision of the Minister approving a transfer of an easement from one corporate subsidiary to another because the Crown breached its fiduciary obligation to the Coldwater Band. The Supreme Court of Canada’s February 2, 2018 decision in Williams Lake Indian Band v. Canada is another reminder of the continuing relevance of the Crown’s fiduciary duty.

The History

In 1858 when the colony of British Columbia was established, the Williams Lake Indian Band occupied Village Lands at the foot of Williams Lake. Governor Douglas provided assurances to the Band and others in the area that the Imperial Crown would survey their occupied village sites and reserve them for their benefit. Later the Crown issued a proclamation that permitted settlers to acquire “unoccupied and unreserved and un-surveyed Crown land” with certain exceptions, including “an Indian Reserve or settlement.” The settlers acquired lands by recording pre-emptions (a process that gave settlers the right to purchase public land). Notwithstanding the assurances given to the Band, the Village Lands were pre-empted, and government officials took no steps to call into question the pre-emptions recorded contrary to the proclamation and the legislation that subsequently effected it. The Band was therefore dispossessed from the Village Lands. The Band was later provided with a reserve on the other side of the Lake.

The Claim

Post 2008, the Band made a claim under the provisions of the Specific Claims Tribunal Act  alleging the Crown breached its legal obligation to protect the Band from being dispossessed of the Village Lands. The Specific Claims Tribunal decided the Band’s claim was well-founded: the Crown had breached its obligation to the Band by failing to prevent the Village Lands from being pre-empted and failing to challenge the pre-emptions that were unlawfully recorded. The Federal Court of Appeal overturned the Tribunal’s decision. The Tribunal appealed that decision to the Supreme Court of Canada.

The Supreme Court of Canada’s Decision

The actual issue in the Supreme Court was whether the courts should review the Tribunal’s decision on the standard of correctness or of reasonableness. The Supreme Court decided the applicable standard was reasonableness. That would normally mean the Supreme Court accepted that the Tribunal’s decision fell within a range of reasonable conclusions. However, the way in which the Supreme Court analyzed the Tribunal’s reasoning makes it clear that the Court considered the Tribunal’s statement of the legal principles and its application of those principles to the facts were fundamentally correct. The Supreme Court addressed many issues in this case. Of particular interest, however, to project proponents in Canada is the Supreme Court’s treatment of the Crown’s fiduciary obligations to Indigenous peoples.

The Fiduciary Obligation. There are two ways in which a fiduciary obligation may arise between the Crown and Indigenous peoples:

1. When the Crown has discretionary control over a specific or cognizable aboriginal interest, (the “sui generis fiduciary obligation”).

2. Where the Crown has undertaken to exercise its discretionary control over a legal or substantial practical interest in the best interests of a beneficiary (the “ad hoc fiduciary relationship”).

Sui Generis Fiduciary Obligation. The majority of the Supreme Court confined its consideration to the sui generis fiduciary obligation, and did not address the question of the Crown’s ad hoc fiduciary obligation. The Crown, as a fiduciary, must exercise its discretionary control in accordance with the equitable standards that require loyalty, good faith and full disclosure. In its pursuit of the beneficiary’s interests, the fiduciary must exercise the care of a person of ordinary prudence in managing his or her own affairs. The sui generis fiduciary obligation in the Aboriginal law context exists in relation to a specific or cognizable Aboriginal interest. It was the identification of such interest that was a crucial issue in the Supreme Court.  There was no dispute that if the fiduciary obligation existed, the Crown was in breach of that obligation. The federal Crown argued that, prior to British Columbia’s entry into Confederation, the sui generis obligation had not existed.

• As noted earlier under colonial law and policy “Indian settlements” were to be protected from pre-emption. The Supreme Court decided the Tribunal reasonably concluded the Village Lands would have qualified as an Indian settlement under the proclamation, and that colonial policy governing the implementation of the proclamation should have led to measures to prevent those Lands from being pre-empted by settlers.

• The Crown contended its fiduciary obligation only arose when land had in fact, been provisionally set aside as a reserve, and not where land only “ought to have been set aside”. The Tribunal rejected this contention, reasoning that recognition of an Aboriginal interest in land under the then-prevailing law and policy governing reserve creation was sufficient to give rise to a “cognizable interest for the purpose of identifying the fiduciary duties of Crown officials carrying out their functions within that process”. The Supreme Court accepted this approach was reasonable so long as there was a sufficiently specific Aboriginal interest at stake in the early stages of the reserve creation process. The requisite specificity was present here because officials of the Crown ”would have been in a position to identify specific land in which Indigenous peoples had an interest”.

• The Crown’s fiduciary duty to the Band was not “at large”; it was more specific. It related to the Band’s interest in the Village Lands. The Tribunal was required to consider the Crown’s acts and omissions in relation to the Village Lands, not in relation to other land or the Band’s best interest in general.

Discretionary Power. The second element of the test for the existence of a fiduciary duty was the existence of discretionary power on the part of the Village Lands. Crown officials’ knowledge of the Band’s interest in the Village Lands, coupled with the requirements of colonial law and policy to take steps to protect that interest, gave rise to a discretionary power on the part of the Crown officials in carrying out their functions in accordance with that law and policy.

Breach of the Fiduciary Duty. The Crown failed to meet its fiduciary obligation because the officials charged with protecting the Band’s interests failed to secure the interests of the Band in the Village Lands and improperly gave priority to the unlawful pre-emptions that led to the Band’s dispossession.

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Please contact your McInnes Cooper lawyer or any member of the Aboriginal Law Team @ McInnes Cooper to discuss this topic or any other legal issue.

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