Morse, Brad --- "Canadian Developments -- The Musqueam Decision: A Landmark for Indian Rights" [1985] AboriginalLawB 18; (1985) 1(13) Aboriginal Law Bulletin 7

• Canadian Developments – The Musqueam Decision: A Landmark For Indian Rights

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Canadian Developments –

The Musqueam Decision:
A Landmark for Indian Rights

by Brad Morse

The Supreme Court of Canada rendered one of its most importantdecislons In the law of native rights on Novemberl, 1984 In Guerin, et al v The Queen. With the exception of its judgement in the Calder case in 1973, in which aboriginal title was confirmed as a recognised legal concept in Canadian common law, the Musqueum case is the most fundamental decision in the field of Native rights since St. Catherines Milling and Lumber Co. v The Queen (delivered in 1887 and later affirmed by the Privy Council).

This case is also of major significance. beyond this branch of law for its expressionof the Supreme Court's view on trusts and fiduciary relationships, it may also impact significantly on Crown fability in other cases.

For all of its significance, the history of the case began quite innocuously.The Musqueam Indian Band, who are part of the coastal Salish Nation, occupy a reserve in their traditional territory within the Vancouver city limits adjacent to the University of British Columbia Endowment Lands. Given its location, the reserve of over 400 acres has been a very valuable piece of property for many years. The Department of Indian Affairs (DIA) was formally approached by the Shaughnessy Heights Golf Club in 1957 with a proposal to lease 160 acres for a golf course and country club. The terms offered were for 15 years, subject to renewal for four successive periods of 15 years each (or 75 years in total), at a fixed rent of $25,000 per annum for the first period. and no more than a 15% increase in each successive period, plus retaining ownership in all structures. The full proposal was never presented to the Band Council nor to other government agencies by the DIA official involved. The Band Council rejected the offer and sought dramatically different terms. The DIA official did not renegotiate the lease but dearly misled the Band Council to believe that he did.

Although the full band ultimately voted to approve the lease and surrender the necessary reserve land for Trial Division found that they would not have done so if they were fully informed of the terms of the lease. Despite repeated efforts,they were not provided with a copy of the lease until 1970.

After years of unsuccessful attempts to resolve the matter, the Band sued the Queen in Right of Canada for damages for breach of trust and the tort of deceit. Mr Justice Collier, after a lengthy trial, concluded that the Crown was a trustee in law to an Indian band and that its duties as trustee had dearly been breached. He assessed the plaintiffs' damages at $10 million.

The Federal Court of Appeal reviewed the evidence at length and did not disturb the trial judge's findings of faux. Nevertheless, LeDain JA (as he then was) delivered the unanimous judgement allowing the appeal on the basis that the obligations of DIA to the Band were only those of a ‘political trustee’ which were unenforceable in the courts.

The Supreme Court of Canada heard argument in June of 1983 from the parties and the National Indian Brotherhood as an intervenor. Sixteen months later it reversed the Federal Courtof Appeal and restored the trial judgement with its $10 million award but used three different rationales to achieve this unanimous result (8-0 as the late Chief Justice tasking took no part in the final judgement).

Although the Supreme Court of Canada obviously did not intend to add fuel to legal debate, this is one of those situations where there is no clear majority judgement within a unanimous decision. Four judges, led by Mr Justice Dickson (as he then was), concluded that this was not a proper case to apply the principles of trust law and that one should instead regard it as a breach of a fiduciary obligation. Madam Justice Wilson, Ritchie and McIntyre JJ., concurring, ruled that the fiduciary duty of the Crown had crystallised into an express trust upon the surrender of the land in question such that a beach of trust had occurred. The remaining member of the court, Mr Justice Estey, preferred to find in favour of the Band by reliance upon the law of agency and its breach by the Crown.

Despite the uncertainty that such a split decision normally generates, there are many principles of law which have been forcefully articulated in both the Dickson and Wilson judgements so as to represent the clear opinion of a vast majority of the Court (six of the present nine members). They both ruled that the Indians' interest in their land is a pre-existing legal right not dependant upon the Royal Proclamation of 1763, the Indian Act or any other legislative provision of executive order for its existence. It is a special right in law derived from the Indians' historic occupation and possession of their traditional lands. This removes any confusion remaining from the 3-3-1 split of the Court in Calder and goes beyond the Privy Council ruling in the St Catherines Milling case. The Court went even further and forcefully stated that this premise is not limited to lands set apart as reserves but applies equally to instances of unrecognised aboriginal title in traditional lands.

The Court viewed the nature of Indian title and the restraint upon its alienation except to the Crown as also creating a unique Crown-Indian relationship. The terms of the Royal Proclamation and successive statutes confirm this relationship and describe how Indians may sell or lease their lands. An equitable obligation, enforceable by the courts, is borne by the Crown to deal with these lands for the benefit.of the Indian people in doing so, these seven judges conclusively rejected the 'political trust' or 'trust in the higher sense' doctrine of Kinloch v Secretary of State (1882-H.L), Tito v Waddell (1977-Ch.) and others, not to mention Mr Justice LeDain's judgement in the Court of Appeal.

Both Dickson and Wilson JJ. define this responsibility as being a fiduciary duty. Their disagreement arises after the point at which a surrender is granted to the Crown by the indians. Madam Justice Wilson believed that the fiduciary duty which existed at large prior to this event is transformed into an express trust covering the specific land surrendered for the specific purpose agreed to by the indian beneficiaries. In her view 'There is no magic to the creation of trust: A trust arises... whenever a person is compelled in equity to hold property over which he has control for the benefit of others (the beneficiaries) in such a way that the benefit of the property accrues not to the trustee, but to the beneficiaries'.

Mr Justice Dickson,on the other hand,was concerned that this unique situation does not fit readily within the existing law of. trusts, which he described as a 'highly developed, specialised branch of the law'. All of the elements necessaryto create a valid express trust are not present and the element of unjust enrichment lying at 'the heart of the constructive trust' (per the Court in Pettkus v Becker) is also absent. He also rejects the applicability of the law of agency while noting that there is a 'certain resemblance' to this unique situation. He preferred to retain the fiduciary obligation concept to govern this area of law as being more flexible and appropriate to the Indian context. In doing so, he held that the Crown's duty is ‘trust-like in character’ and ‘subject to principles very similar to those which govern the law of trusts’, such that any breach will engender liability ‘in the same way and to the same extentas if such a trust were in effect’.

Our new Chief justice has given us a very broad approach to the notion of fiduciary obligations by stating that:

Where by statute, agreement, or perhaps by unilateral undertaking, one piny has an obligation to act for the benefit of another and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary. Equity will then supervise the relationship by holding him to the fiduciary's strict standard of conduct.

It is sometimes said that the nature of fiduciary relationships is both established and exhausted by the standard categories of agent, trustee, partner, director, and the like. I do not agree. It is the nature of the relationship, not the specific category of actor involved that gives rise to the fiduciary duty. The categories of fiduciary, like those of negligence, should not be considered dosed.

This very quotable material may be seized upon by counsel in the future in areas completely unrelated to Native rights.

The Court also definitively stated that the Crown could not rely upon the terms of the documents involved alone, as the oral representations of the Indians were effective to 'inform and confine the field of discretion in which the Crown was free to act.' Since Indians have long argued that the treaties must be interpreted and viewed in light of the oral negotiations and the promises of the Crown's agents rather than solely from the written text, this may have considerable impact upon treaty rights. The Court dearly tried to discover and give legal effect to what the Indians understood the terms of the transaction to be, instead of relying upon what government officials drafted and had ratified by the Band.

The Court further recognised the Band Council as more than the political representative of the band members. It viewed the Council as able in law to instruct DIA and its officials as to how to exercise their fiduciary obligation. This, too, is a major milestone in this field as is the Court's rejection of a technical application of statutory limitation periods. The Court defined the actions of DIA officials as constitutng ‘equitable fraud’ such that the limitation period began to run, if at all, only when, the Band had actual knowledge of the improper conduct of the Department (ie., when they saw the lease in 1970).

The decision is also striking for its blunt criticism of the conduct of DIA offcials and legal counsel. The latter's behaviour was described as not exemplifying the high standard of professionalism we have come to expect in the conduct of litigation' while its tactics were said to have ‘left a lot to be desired’.

The Musqueam case is a watershed which has sparked dramatic interest amongst aboriginal peoples and government officials. DIA believes that it has at least 90 claims in its specific claims resolution process at this moment which are affected by the decision, while literally thousands more await to be pursued under the federal claims policy or in court. The Government of Canada has also instituted a review of its current procedures and policies regarding its management of Indian assets as a result of this judgement. On the other hand, even with its nearly 100 page review, the Supreme Court has not answered a long list of precise questions that exist related to the specific content of this fiduciary obligation. The case also pre-dated the constitutional entrenchment of aboriginal and treaty rights In s.35 of the Constitution Act of 1902. It gives only the most limited guidance in Indicating what those entrenched aboriginal rights may include. The Court does not indicate if this fiduciary duty of the Crown further extends to Metis and Inuit peoples.

In addition, the judgementwill foment considerable controversy concerning its actual meaning. Mr justice Steele of the Supreme Court of Ontario has already attempted to restrict the scope of the Musqueam case in a postscript to his judgement in Attorney-General for Ontario v Bear Island Foundaton. After conducting one of the longest civil trials in Ontario history (120 court days over 2.5 years), he was forced to take the unusual step of supplementing his completed text when the Guerin judgement was released just prior to his own decision being issued. Although he changed his view on the trusteeship issue so as to accept the Supreme Court of Canada ruling (p.281 v. p.25), he discounted the broad sweep. of the Court's statement and readily distinguished it on the very different factual circumstances involved.

Nevertheless, this writer is of the view that Guerin v The Queen will continue to shake the comfortable assumptions of federal officials while costing the treasury many, many millions more than the $10 million awarded to the Musqueam Band.