Case Summary: Beardy’s & Okemasis Band # 96 and #97 v Her Majesty the Queen in Right of Canada, 2015 SCTC 3 and 2016 SCTC 15

December 28, 2017

This specific claim relates to the Crown’s non-payment of Treaty 6 annuities to members of the Beardy’s and Okemasis Bands (now known as the “Beardy’s and Okemasis First Nation” or the “BOFN”) between 1885 and 1888 following the North-West Rebellion (the “Annuities Claim”).

Treaty annuities claims are somewhat unique in Canadian law with very little by way of existing precedent to guide the process. The Annuities Claim was originally filed with the Specific Claims Branch in 2001 and was rejected for negotiation by Canada in 2008. Because the Annuities Claim was rejected for negotiation, it became eligible for filing with the Specific Claims Tribunal (the “Tribunal”) when it opened in spring 2011. The Annuities Claim was filed with the Tribunal on July 11, 2011 – marking the second claim ever filed with the Tribunal, and the first to proceed to a hearing.

The Annuities Claim proceeded before the Tribunal in two phases: (1) the liability phase, where the issue was whether the Crown was legally liable for the termination of annuity payments; and (2) the compensation phase, where the issue was how the BOFN’s historical losses should be brought forward to today.

General Findings and their Significance
After a thorough review of the evidence before it in the liability phase, the Tribunal found that the Claimant was unlawfully and unjustifiably punished in relation to the events of the 1885 North-West Rebellion. This decision marks a departure from the way the Canadian public has viewed the role of Indian Bands in that infamous and largely glossed over event in Canadian history.

Perhaps equally as significant, the Beardy’s decision on compensation rejected Canada’s flawed position that has repeatedly surfaced in Aboriginal law litigation; that is, that equitable compensation for a breach of fiduciary duty or treaty obligation should be discounted based on how much of money would have been spent or “consumed” by the First Nation had it received the money in the first place. We now have judicial authority denouncing such an approach as being inconsistent with principles of equitable compensation. It is our hope that this guidance and clarity will pave the way for a more rational, expedient, and equitable resolution of specific claims in Canada.

Liability Decision
On May 6, 2015, the Tribunal released Beardy’s & Okemasis Band # 96 and #97 v Her Majesty the Queen in Right of Canada, 2015 SCTC 3 (the “Liability Decision”). In the Liability Decision, Justice Harry Slade held Canada owed an outstanding legal obligation to the BOFN for the unlawful withholding of annuity payments, totalling $4,250.00.

The BOFN’s Annuities Claim proceeded as a test case for 12 other First Nations in Saskatchewan with virtually identical claims against the Crown for the unlawful withholding of treaty annuities in the wake of the North-West Rebellion.

The Tribunal found in favour of the BOFN on all issues in dispute, ultimately concluding that:

… the Tribunal has jurisdiction to determine the Claim of the Beardy’s & Okemasis First Nation on the ground of the failure to provide “lands or other assets under a treaty” (SCTA, sub-section 14(1)(a)).

Further, I find the Crown breached its lawful obligation to pay treaty annuities to the Beardy’s & Okemasis First Nation. [paras 437-438]

The Tribunal’s discussion of its jurisdiction to hear the claim is in response to the Crown’s arguments that: (i) the loss of treaty payments to the members of the Beardy’s and Okemasis Bands are not losses of the Bands as collectives, but rather losses of the individual members which fall outside of the Tribunal’s adjudicative jurisdiction; and (ii) that the treaty payments in issue are not tangible property, and therefore fall outside of the Tribunal’s adjudicative jurisdiction.

Justice Slade rejected both arguments.

With respect to the termination of treaty payments to the so-called “rebel” Bands in the wake of the 1885 Rebellion, the Crown sought to justify this conduct on the grounds that: (i) the Bands violated the terms of Treaty 6; (ii) the termination of treaty payments was a lawful exercise of prerogative power; or (iii) that these measures were legal by retroactive operation of the War Measures Act.

Regarding whether the Beardy’s and Okemasis Bands violated the terms of Treaty 6, the Tribunal stated, “there is no evidence that the presence of the rebel forces at the Beardy’s & Okemasis reserve at Duck Lake was due to anything but a coincidence of location,” (para 408). The Tribunal further concluded that:

Chiefs Beardy and Okemasis were not disloyal. The members of the band were not disloyal. Some joined the rebels in the battles. There is no evidence that these few were aligned politically with Riel or ideologically motivated. If their participation was untrue to the allegiance with Canada memorialized by Treaty 6, it did not warrant the branding of the collective as disloyal. [para 414]

The Tribunal rejected Canada’s arguments that the Crown’s conduct was excusable as either an exercise of prerogative power, or because of the retroactive effect of the War Measures Act.

Ultimately, the Tribunal agreed with the BOFN’s theory of the case, specifically, that the termination of annuity payments was not a lawfully sanctioned reaction to the events of the Rebellion at all, but rather, a calculated series of punitive and regressive policies aimed at breaking the tribal system and subjugating the Cree people in breach of the terms of Treaty 6, and in breach of the Crown’s statutory, fiduciary, and honourable duties.

Following the release of the Liability Decision, the Crown made the unusual election not to file for judicial review with the Federal Court of Appeal, and the parties proceeded to the compensation phase.

Compensation Decision
The task before the Tribunal in the compensation phase of the hearing was to determine the amount of compensation payable to the Claimant pursuant to paragraph 20(1)(c) of the Specific Claims Tribunal Act, SC 2008, c 22 [SCTA]. This required the Tribunal to consider the most just way to “bring forward” the $4,250.00 in withheld annuities to its present day value, employing the principles of equitable compensation applied by the courts.

The Tribunal acknowledged there was no disagreement that equitable compensation was the appropriate remedy in this case, noting that such a remedy must account for the nature of both the obligation and the breach.

Regarding the nature of the obligation, the Tribunal provided the “performance of a treaty promise is a Crown obligation of the highest order,” (para 75) and “[i]n the present matter, the nature of the obligation calls for the most honourable standard of fiduciary conduct,” (para 76).

Regarding the nature of the breach, Justice Harry Slade, referring to his Liability Decision, concluded:

The Crown withheld money due to the Claimant under the most solemn of commitments, a treaty. Moreover, it did so to justify to the public the exercise of control over the Cree, whose autonomy had been affirmed by the requirement on the Crown to make treaty in order to open the land for settlement by foreigners. [para 77]

Having set the stage for the analysis, the Tribunal canvassed established principles of equitable compensation. Justice Slade noted the functions of the remedy are to restore the beneficiary to the position they would have been in had the breach not occurred, and to uphold and enforce the fiduciary relationship. To achieve these functions, the Tribunal is afforded discretion in its assessment made as of the time of the trial, as opposed to the time of the breach as in common law. Equitable compensation accounts for both the lost property – in this case, money – and the forgone opportunity to use it. The Tribunal is not required to consider common law principles of remoteness and foreseeability in its assessment, and must consider the factors of most advantageous use and the benefit of hindsight to serve the remedy’s objective of deterrence, subject to realistic contingencies where applicable.

Justice Slade clarified the presumption of most advantageous use is not a “rebuttable” presumption, as legal presumptions generally are. In the context of equitable compensation, the defaulting fiduciary need not present evidence of what would have happened with a trust asset that was wrongfully withheld; it does not “make sense” in the assessment of equitable compensation (para 102).

The Tribunal confirmed, “[e]quitable compensation includes compound interest to take account of the time value of money,” (para 115). The issue before the Tribunal was at what rate that interest should accrue (para 116).

After providing an overview of the parties’ expert reports tendered to assist the Tribunal in selecting an appropriate interest rate, the Tribunal determined the application of the Band Trust Fund (BTF) rate, which is set annually by the government and based on the bond rate, compounded annually, was appropriate in this case. The Tribunal reasoned this rate would most realistically reflect the actual Crown practice in relation to money held for the benefit of First Nations. Further, “the application of the BTF rate as a proxy for interest in equity would reflect a realistic use of the withheld annuities” (para 119).

The Tribunal therefore accepted the Claimant’s expert’s assessment of equitable compensation at $4,500,000.00, which the Tribunal said was, “in effect, the equivalent of applying compound interest at the bond rate to the Claimant’s loss of annuities totalling $4,250.00,” (para 120).

The Tribunal declined the Claimant’s proposal to award a larger figure to fulfill equitable compensation’s deterrence function because the SCTA precludes the Tribunal from awarding punitive or exemplary damages. The Tribunal held that, unlike punitive and exemplary damages at common law, the consideration of deterrence in equitable compensation “does not take the form of a discrete award,” (para 123).

However, acknowledging the grave nature of the breach in this case, the Tribunal stated:

While a very substantial award of punitive damages as a deterrent could be justified due to the conduct of the Crown in the present matter, a discrete award on that ground is forbidden by the SCTA. [para 133]

In relation to the application of “realistic contingencies”, the Tribunal accepted our submissions that the Ontario Court of Appeal’s consideration of the concept in Whitefish Lake Band of Indians v Canada (AG), 2007 ONCA 744 was obiter and therefore was not a binding precedent. The Court did not determine equitable compensation in that case, instead sending the matter back to trial due to an insufficient evidentiary record. The parties settled out of court instead of advancing fresh arguments on the assessment of compensation in a new trial.

The Tribunal also accepted our argument that because “members of the Beardy's & Okemasis Bands faced tremendous hardship and starvation in the aftermath of the Rebellion” it was “common sense” the unpaid annuities would have been spent immediately. Regardless, Justice Slade stated the question of how the Claimant would have likely spent the money had it been received was irrelevant to the quantification of the loss. Therefore, the Tribunal dismissed Canada’s argument that monies that would have been consumed were not compensable in equity. Justice Slade wrote:

To treat consumption as a “realistic contingency” at the outset of the assessment of equitable compensation would treat a portion of the loss as having no compensable value. In the Claimant’s circumstances in 1885, the effect would be to wholly deny the Claimant an equitable remedy. But this is the logical outcome if the Respondent’s argument is accepted. [para 153]

The Tribunal therefore declined to “parse the loss into components of consumption and investment” because it would eliminate the deterrent value of equitable compensation (para 155).

Further, the Tribunal distinguished the fact-driven application of the concept of realistic contingencies in Guerin v R, [1984] 2 SCR 335, where it was necessary to account for fluctuations in the utility of surrendered land because the highest and best use had changed over time. The Tribunal concluded there was no parallel in the matter before it, given the exercise in the present case was to bring forward the loss of money, considering the factors of highest and best use and the benefit of hindsight. Furthermore, Justice Slade noted Canada did not establish the probability of contingencies that could affect the value of the withheld monies brought forward. In cases where realistic contingencies would apply, as in Guerin, Justice Slade stated their consideration should take place at the end of the analysis, rather than at the beginning.

Lastly, the Tribunal declined Canada’s proposal to offset the cost of replenishing livestock using withheld annuity money because the Crown was required under Treaty 6 to provide aid.

In sum, the Beardy’s decision on compensation provided much needed judicial guidance and clarification on the nuanced and fact-driven assessment of equitable compensation, both in the Aboriginal law context and generally.

Media Coverage of the Beardy’s Litigation

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