December 21, 2017
Tobacco Plains Indian Band v Her Majesty the Queen in Right of Canada, 2017 SCTC 4 dispels the notion that a fiduciary duty only applies to reserve land where administration and control is formally conveyed to the federal Crown. This is significant for First Nations who wish to launch specific claims for land set apart around the time of Confederation.
This decision also underscores that Canada cannot shirk its fiduciary duty if it maintained de facto control of reserve lands, even if this control was not legally formalized. In finding a breach of fiduciary duty regardless of whether that Band’s reserve was a “provisional reserve” or a reserve under the Indian Act, Tobacco Plains has clarified the scope of “administration of reserve lands” within the meaning of section 14(1)(c) of the Specific Claims Tribunal Act.
The Specific Claims Tribunal released Tobacco Plains on November 28, 2017. Justice Barry MacDougall held that Canada had breached its fiduciary duty to the Tobacco Plains Indian Band (“TPIB”) in three separate instances.
The Parties agreed to have the Claim proceed before the Tribunal in two phases: (1) the validity phase, where the Court addressed the issue of whether Canada had breached its fiduciary duty to the TPIB; and (2) the compensation phase, where the Tribunal will decide how to bring forward the TPIB’s historical losses to today.
The November 28, 2017 decision addressed the Claim’s validity.
This Claim involved two parcels of land that were allotted to the predecessor of the TPIB in 1884 and were subsequently taken by the government for use by the Department of Customs (“DOC”) due to its proximity to the Canada-USA border. Canada paid Chief Paul and the Band $150 for this land in 1915 (with 90% going to Chief Paul and only 10% to the Band). In the validity hearing, Canada and the TPIB agreed that the actual value of the land was $208.
The first 2.97-acre parcel of land was taken for the Roosville Customs House. The Customs House land also included a one-acre farm for the customs manager’s personal use, with Department of Indian Affairs (“DIA”) officials acknowledging this excellent farm land was a rarity on the TPIB reserve.
The second parcel of land was taken for a water pipeline and ditch to service the Customs House. Canada admitted that it breached its fiduciary duty to the Claimant by failing to compensate the TPIB for the use of this land from 1918 to 1970. The historical value of the land will be determined in the compensation phase.
At issue in the validity phase were the Crown’s obligations and duties in relation to the Crown’s taking of the 2.97 acres of land for the Customs House.
The Breaches of Fiduciary Duty
Indian Reserve 2 (“IR 2”) was set apart for the use and benefit of the TPIB close to when British Columbia joined Confederation in 1871. During these early years, including when the reserve was surveyed, British Columbia retained administrative control over the underlying proprietary interest in IR 2.
Canada argued that IR 2 was a “provisional reserve”, as official administrative control had yet to be transferred to the federal government from the province. Canada also argued the Customs House land had been taken legally through the authority of the McKenna-McBride Agreement. The McKenna-McBride Agreement was jointly created by the British Columbian and Canadian governments to resolve their issues over administration and control of reserve lands.
The TPIB maintained that the reserve land was “lands reserved for Indians” within the meaning of the Constitution Act, 1867 and a reserve under the Indian Act as the federal Crown had de facto control over IR 2.
The Claimant alleged the federal Crown breached three specific obligations in relation to the taking of a portion of IR 2:
a. the duty to minimally impair the TPIB’s interest in IR 2;
b. the duties of full disclosure and consultation; and
c. the duty to pay adequate compensation to the TPIB.
The TPIB submitted that the Crown had a duty to minimally impair the Band’s interest in IR 2 when taking land. The First Nation submitted that the Crown should have considered other options in taking up the 2.97 acres, such as securing a lease or ensuring that the TPIB held a reversionary interest in the land.
In response, Canada submitted that it had no duty to minimally impair the TPIB’s right to the land as the reserve was a provisional reserve, and this duty did not attach to provisional reserve interests. Canada also argued it was reasonable for the Crown to require the full interest in the land for the Customs House.
The Tribunal rejected Canada’s arguments and held there was a duty to only minimally impair the TPIB’s right in the land. The Tribunal relied on the two-step process for taking of lands “in the public interest” as articulated in Osoyoos Indian Band v Oliver (Town), 2001 SCC 85 [Osoyoos]. The first step occurs when the Crown acts in the public interest to determine that Indian lands may be needed to “fulfill some public purpose”. While there is no fiduciary duty at the first stage of this process, the second stage, which arises once the Crown has decided to take reserve land in the public interest, places fiduciary obligations on the Crown. The second-stage fiduciary obligations require the Crown to balance the public interest with the Indian interest and ensure that the Indian interest in reserve land is minimally impaired (para 111).
The Tribunal was clear that the Osoyoos test applies regardless of whether the reserve land was a “provisional” or Indian Act reserve. Federal Crown officials treated IR 2 as if it were a reserve under federal authority and the TPIB was vulnerable to their unilateral discretion. The Tribunal held that these factors were sufficient to crystallize the TPIB’s interest in the land.
The Tribunal did not expressly consider the TPIB’s argument on this point, but held there were inadequate discussions with the Band over compensation for the land. The Tribunal also noted that the DIA’s Chief Surveyor reported that “in similar cases the consent of the Indians’ is required as a matter of policy” but as the compensation offered was “fair”, the TPIB’s consent was unnecessary (para 157).
The Parties agreed that Canada underpaid the TPIB and its Chief for the value of the lands taken in 1915. Nonetheless, Canada argued that the Customs Land was still taken with legal authority. The Claimant disagreed, and argued that the “manner in which the DIA arrived at its valuation was in breach of its fiduciary duties to the Band” (para 151).
The Tribunal agreed with the TPIB and held that the Crown breached its fiduciary duty as proper compensation was a condition of the taking. The McKenna-McBride Agreement Interim Report on the IR 2 lands recommended “proper compensation be made to the Indians” (para 154). This was not provided.
As such, combined with the Crown’s breach of fiduciary duty in respect to the duty of minimal impairment, the Tribunal held that the Customs Land was not taken under legal authority (para 165). The Tribunal added that the failure to pay proper compensation “went to the heart of the authority of [the Interim Report] such that without its fulfillment, the taking of land from IR 2 lacked authority” (para 166).
Finally, the Tribunal addressed the issue of the recipient of the $150 payment. As stated above, Canada paid 90% of the compensation owed to Chief Paul. The further 10% went to the Band. While Canada argued that the distribution of money was in line with Canada’s policies at the time, the Tribunal held that the DIA was primarily concerned with the interests of the DOC, even though the DIA had a duty to protect the Band’s interests. Authorizing a 90/10 split of the compensation - when Chief Paul had no individual legal interest in the land - was a further breach of Canada’s fiduciary duty to the Band.
The Tribunal concluded the TPIB had proved “a breach of a legal obligation arising from the Crown’s provision or non-provision of reserve lands, including […] its administration of reserve lands.” Accordingly, the Tribunal determined the Crown breached its fiduciary duty to the TPIB, regardless of whether IR 2 was a provisional reserve or a reserve under the Indian Act.
Given that the Claimant established the Claim’s validity under paragraph 14(1)(c) of the Specific Claims Tribunal Act, the Tribunal may now look to the issue of compensation in the second phase of the hearing.