January 14, 2020
The following is a case summary of Makwa Sahgaiehcan First Nation v Her Majesty the Queen in Right of Canada, 2019 SCTC 5 (the “Reasons”), rendered by the Specific Claims Tribunal (the “Tribunal”) on December 13, 2019, regarding the validity of SCT-5003-11 (the “Claim”) advanced by Makwa Sahgaiehcan First Nation (“Makwa”).
In August 1930, the Makwa Indian Reserve No. 129B (the “Reserve”), comprising 9,243.7 acres, was confirmed by Order in Council PC 1776. With the anticipated development of a new railway branch, settlers squatted on the Reserve and a series of surrenders and expropriation of the Reserve took place between 1932 and 1958.
The Claim involves five separate takings:
1. The 1932 Townsite Surrender;
2. The 1933 Railway Taking;
3. The 1939 Townsite Surrender & Expansion, and Sales at Undervalue;
4. The 1958 Townsite Expansion; and
5. The 1957 Disposition of Six Acres for Meadow Lake School.
The Tribunal held that Makwa established the Crown’s liability in relation to all but the final two takings.
As early as September 1931, settlers had built permanent structures within the boundaries of the Reserve. At the time, the Department of Indian Affairs (the “DIA”) made no effort to remove the squatters even though the occupation was not permitted under the Indian Act, RSC 1927, c. 98 (“Indian Act”). In 1932, 28.29 acres of the Reserve was surrendered by a unanimous vote for the establishment of a townsite. The surrender was confirmed by Order in Council in July 1934. After the surrender was completed, the land was subdivided in lots which were sold to the squatters and newcomers.
Makwa argued that the DIA pursued the surrender for an improper motive, being to make lawful the occupation of the Reserve by squatters. To legitimize the occupation was in the interest of the DIA since by doing so, it would not have to take measures to evict the squatters. Plus, Makwa argued the surrender was exploitative because the misrepresentations made to the band tainted the dealings and impacted the surrender vote (paras 48 and 49).
The Crown argued that the evidence did not support the allegation that the DIA knew squatters occupied lands within the Reserve prior to the surrender (para 84). Plus, the Crown argued there was no evidence of improper motive or conflict of interests. It stressed that the surrender was not exploitative as Crown officials complied with the Indian Act (paras 50 to 52).
The Tribunal held that the DIA was a fiduciary in its relationship with Makwa since it held the legal title of the Reserve and had discretionary control over its administration. Fiduciary duties applied throughout the surrender process and the duties of loyalty, disclosure and acting with prudence in managing the band’s lands continued after the acceptance of the surrender in July 1934 (paras 137 and 144).
The Tribunal found that the Crown’s acceptance of the surrender was exploitative as the only choices available to the band were to surrender their land and get money from it or to refuse the surrender and live with a de facto taking of its land. The Tribunal further found that the DIA had pressed the band to vote for a surrender and had misrepresented the expropriation powers of the Canadian National Railway (the “CNR”). This tainted the band’s understanding during the vote about whether to consent to the taking, which was held in February 1932. Hence, the vote did not reflect the true intent of the band (para 157).
The Crown officials breached Crown fiduciary duties of loyalty, consultation and adequate consideration of the interest of the band. The DIA did not consider removing the squatters; their interests were given priority over the band’s. The band was told the CNR applied to expropriate for townsite purposes but was never made aware that the CNR did not have the power to expropriate for such purposes. The surrender was arranged in haste and there was an element of self-interest for the DIA in taking it. In fact, it would resolve the trespass the DIA had permitted to continue. By administrating the Reserve as such, the Crown breached its fiduciary duties (para 159).
For these reasons, the 1932 surrender was found to have been unlawful, and therefore a valid claim valid under paragraph 14(1)(c) of the Specific Claims Tribunal Act, SC 2008, c 22 (“SCTA”).
In May 1933, Order in Council PC 1913-916 transferred 46.67 acres of the Reserve to the CNR for purposes of a railway and station grounds. The Order in Council stated that the taking was made under the authority of the Indian Act.
Makwa argued that whatever interest may have vested in the CNR, it is subject to the Railway Act, RS 1927, c 17 (“Railway Act”). Section 189 of the Railway Act provided that the CNR could not alienate lands taken under the Railway Act. Therefore, the CNR could not alienate Reserve land. Makwa also argued that the sui generis Indian interest remained, and that the interest in the land transferred to the CNR was less than the entire interest held by the Crown. Fiduciary duties thus apply and Makwa’s right to use and possess the land ought to have been restored after the railway did not proceed (paras 174 to 177).
The Crown argued it obtained a fee simple interest with the transfer. It also argued the Indian interest was extinguished by the vesting in the CNR of the interest of the Crown under the Act to Amend the Canadian National Railways Act, SC 1929, c 10 (paras 182 and 183).
The Tribunal found that the interest acquired by the CNR was a statutory easement provided by the Order in Council issued in May 1933. In fact, it could not have been a fee simple interest since the CNR was not allowed under the Railway Act to sell the transferred lands. A simple statutory easement sufficed for the purpose of the projected constructions (para 275).
The terms of the Order in Council did not show the clear and plain intention of the Crown to extinguish the Indian interest. Therefore, the Indian interest survived the grant as the public purpose did not necessitate its extinguishment. In fact, as the project was cancelled by May 1933, the absence of a timely public purpose for the interest acquired by the CNR put the Crown in breach of fiduciary duty as it was bound by a duty of minimal impairment (para 299).
Upon the abandonment of the CNR’s plan to construct a railway on the land, Makwa’s interest in the use and possession of the land should have been restored. The failure of the Crown to protect the band from the alienation of the land was in breach of the duty to preserve and protect the Indian interest from exploitation (para 324).
The 1933 railway expropriation was found to have been unlawful, and therefore a valid claim under paragraph 14(1)(c) and (d) SCTA.
By August 1939, a settler village existed on a tract of land of around 25 acres within the boundaries of the Reserve. After consultations, a surrender of 17.08 acres of the Reserve was taken to expand the townsite. The lots were later sold for $50.00 to $85.00 each, even though a surveyor assessed the lots’ values between $115.00 and $400.00.
Makwa claimed the surrender did not comply with the Indian Act and that it was exploitative, in breach of the Crown’s fiduciary duties owed to the band.
The Crown argued the surrender did comply with the Indian Act, and that it prevented an exploitative bargain. Plus, the Crown argued the surrender was in the interest of the band since there was good market for the land and the sale of the lots generated revenue for the band (para 346).
Although the taking of the surrender incidentally served the interests of the DIA, the transaction was not exploitative or improvident, since it was in the interest of the band to receive compensation for settler occupation. Therefore, the acceptance of the surrender by the Governor in Council did not breach the fiduciary duties of the Crown (paras 354 and 356).
However, the Crown breached its post-surrender fiduciary duties when the DIA rejected the land surveyor’s recommendations and sold the subdivisions of the surrendered lands for less than fair market value (para 357).
The 1939 surrender was found to have been unlawful, and therefore a valid claim pursuant to paragraph 14(1)(c) SCTA.
As the settler village, known as the Village of Loon Lake, expanded, it sought to obtain additional lands from the Reserve for future townsite expansion. Negotiations therefore occurred for seven years between the Village of Loon Lake, the DIA and the province.
During those years, three band votes were taken in regard to the further taking. The first vote occurred in November 1954 and 20 out of 25 voting band members were in favour of the surrender and sale of 67.65 acres of the Reserve. However, the vote was rejected by the DIA since the majority of eligible voting band members did not vote. A second surrender meeting was held in July 1955 and only 8 voting band members were present, all of whom opposed the surrender.
In 1957, the Province of Saskatchewan suggested an exchange of 100 acres of Reserve land for 480 acres of provincial Crown land. A vote was taken in June 1957 and 19 voting band members out of 23 voted in favor of the exchange proposal. Senior officials did not deem the vote valid since not all eligible band voters voted. Again, at the time, men and of band did not allow women to vote on the issue.
In June 1958, the exchange was confirmed by Order in Council PC 1958-886 pursuant to section 35 of the Indian Act, 1952, in conjunction with The Municipal Expropriation Act, RSS 1953, c 151 read together with The Community Planning Act, SS 1957, c 48.
Makwa argued that the DIA achieved indirectly the result that it could not achieve directly by obtaining a surrender. The DIA thus acted in an improper manner and breached its fiduciary duties (para 396). Also, Makwa argued the provincial legislation did not allow the taking and selling of land without the consent of the owner in absence of a public purpose (para 412).
The Crown argued that the taking was made in compliance with the Indian Act and the relevant provincial legislation. Plus, the Crown argued its pre-surrender fiduciary duty consisted of preventing exploitative bargains only, which it met (paras 50 and 419).
Although the vote held in 1957 was not taken in compliance with the surrender provisions of the Indian Act, the vote it represented, along with the previous votes, a strong indication of the desire of the membership to proceed to the exchange. Therefore, the transaction was neither exploitative nor improvident, and there was no proof that it was inequitable (para 403).
The Tribunal found that the Crown did not seek to facilitate the exchange while male members of the band obstructed female members’ right to vote. The circumstances made the compliance with the Indian Act impossible. Plus, the Governor in Council had the authority to proceed to such expropriation. Therefore, the Crown did not breach its fiduciary duty under the Indian Act (paras 394, 397, 399 and 437).
The 1958 townsite expansion was found to have been lawful.
At the same time the Village of Loon Lake requested land for the expansion of the townsite, it asked for land for a school site. In June 1957, the Indian agent met with the band Council, and the latter adopted a Band Council Resolution agreeing to give the School Unit Board six acres of the Reserve for $75.00 per acre for the construction of the Meadow Lake School.
The transaction was confirmed by Order in Council PC 1958-614, issued in May 1958.
Makwa argued the Crown did not ensure minimal impairment of the band’s interest in the taking of the six acres, and that the Crown should have consulted with the band regarding the proposed location. Makwa also argued the area taken was in excess of the School Unit Board immediate needs (para 440).
The Crown argued that there is no evidence of an improper motive or of wrongdoing by Crown officials regarding the taking. The Crown argued it complied with the Indian Act and that it acted in the best interest of the band (paras 51 and 52).
The Tribunal found that there had been no breach of statutory or fiduciary duties with regards to the giving of six acres for the construction of Meadow Lake School since the band consented to give the lands, although the consent of the band was not required (paras 441 and 442).
There was a valid public purpose and Makwa did not prove excessive impairment or the absence of need. No evidence showed that a leasehold tenure would have been more adequate under the circumstances (para 442).
The 1957 school expropriation was found to have been lawful.
Subject to any challenge to the Reasons by way of an application for judicial review by the Federal Court of Appeal, the compensation phase will commence in relation to the takings that were found unlawful, namely the 1932 Townsite Surrender, the 1933 Railway Taking, and the 1939 Sales at Undervalue.