Aboriginal Law Bulletin
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by Jason Behrendt
Since the High Court delivered its decision in Mabo (No.2)',1 criticism of the decision has been widespread. Industry representatives and the mining companies in particular have campaigned vehemently to convince the public that Aboriginal native title threatens the economic well-being of the Australian community. As a consequence the Commonwealth Government has come under increasing pressure to extinguish native title to "protect existing title holders."2
Native title may be extinguished by inconsistent grant or legislation containing a "clear and plain intention" to have that effect.3 There is no compensation for Aboriginal people, if their title is extinguished, per se. However, extinguishment must be consistent with the existing laws of the Commonwealth, such as the Racial Discrimination Act 1975 (Cth), and the Constitution. Yet, it is uncertain to what extent these afford satisfactory protection.
A fiduciary duty arises where, as a result of one person's relationship to another, the former is bound to exercise rights and powers in good faith and for the benefit of the latter.4 The purpose of this article is to explore the possibility of a fiduciary duty binding the Crown in relation to native title and the benefits that such a duty may have for Aboriginal people.
A fiduciary obligation towards Native Americans has long been held to exist in the United States. The duty has also been referred to as a "guardian - ward relationship" and a "trust relationship". 5 The variety of terms has been a direct consequence of the shifting basis of the duty.
In Cherokee Nation v State of Georgia ;6 Marshall CJ classified Native Americans as "a distinct political society ... capable of managing its own affairs and governing itself" and that in signing treaties, they had submitted "to be under the protection of the United States."7 In Worcester v Georgia 8 Marshall CJ stated that the Cherokee Nation had "territorial boundaries, within which their authority (of self-government) is exclusive ",9 and that the lands within those boundaries were "not only acknowledged, but guaranteed by the United States."10 The fiduciary obligation arose in the form of a "guardianship" as "a natural incident of such land tenure", for since Native Americans were not considered citizens, a guardian concept provided a means through which their property rights could be recognised and protected.11
The recognition of land tenure and internal tribal sovereignty in Cherokee and Worcester shows that a trust relationship was recognised by treaties rather than being created by them.12 However, treaties and statutory undertakings are no longer the sole source of the obligation. The cases of Lone Wolf v Hitchcock13 and Cramer v United States14 exemplify this shift in approach.
In Lone Wolf, the US Supreme Court held that the US Congress had the power to modify the trust relationship because it had plenary power to manage Native American property - a finding which is clearly inconsistent with Marshall CJ's approach to self-government and internal sovereignty as articulated in Worcester.
In Cramer, the Court voided a federal land patent that 19 years earlier had transferred Native American land to a railway company on the basis of a breach of fiduciary duty. The lands in question were not protected by any treaty or statute, however the Court stated that
'The fact that such right of occupancy finds no recognition in any statute or other formal government action is not conclusive."13
Instead, the Court emphasised "the whole spirit of the traditional American policy towards the dependant wards of the nation."16 This was a logical development in light of the decision in Lone Wolf. The Court had eroded Indian internal sovereignty to allow government management of Native American property. The compromise was to more readily find a fiduciary duty to protect those interests. The new position was dearly stated in United States v Mitchell:
"... a fiduciary relationship necessarily arises when the Government assumes elaborate control over ... property belonging to Indians."17
In Guerin,18 the Musqueam Indian Band surrendered an area of their reserve land to the Crown for the purpose of being leased to a golf dub. This was in accordance with the Indian Act 1970 which, in part, provides that Indian land can not be alienated except to the Crown. The terms of the lease ultimately negotiated by the Crown were less advantageous to the Musqueam Indians than the Crown had previously indicated. As a consequence, the Musqueam Indians suffered financial loss.
The Canadian Supreme Court held that native title may form a basis for a fiduciary relationship between the Crown and indigenous people. However, the majority were not unanimous in determining when and why it arises.
Dickson J, with whom Beetz, Chouinard and Lamer JJ agreed, stated that
"[w]here by statute, agreement, or perhaps by unilateral undertaking, one party 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."
However, this broad statement was limited to arising only when land had been surrendered to the Crown.19 It was negotiations and undertakings in relation to the surrender itself which gave rise to the duty.
Wilson J, with whom Ritchie and McIntyre JJ agreed, argued that a fiduciary obligation with respect to Indian Reserves “has its roots in the aboriginal title of Canada's Indians as discussed in Calder v A-G (B.C.) [1973] 34 DLR (3d)145”.20 She went on to argue:
"I think it is the acknowledgment of a historic reality, namely that Indian bands have a beneficial interest in their reserves and that the Crown has a responsibility to protect that interest and make sure that any purpose to which all reserve land is put will not interfere with it."21
Wilson J concluded that by virtue of the native title the Crown was bound to deal with the land subject to the fiduciary duty.22 The approach of Wilson J is clearly more consistent with the approach articulated in United States v Mitchell.
Canadian cases have often been relied upon by the Australian Courts in many legal fields. In determinations regarding fiduciary duties and native title, American cases should also provide a strong guide for Australian Courts. As Slattery observes, US Courts after the American revolution "... were heir to a developed legal system well adapted to local circumstances, a system which the Revolution, in many respects, did little to disturb. In this area, as in others, the American judges gave expression to the law as it had been understood in the days of British rule. They did not state new doctrine in their views on the status of Indian peoples and their lands; they reaffirmed a long standing position."23
Despite this, Gibbs CJ in Coe v The Commonwealth,24 argued that the history of the relationships between the white settlers and Aboriginal people was different in Australia because Australian Aboriginals were not organised as a "distinct political society separated from others", and had not been uniformly treated as a state. Consequently he held that:
“The judgments in [Cherokee Nation v State of Georgia] therefore provide no assistance in determining the position in Australia. The aboriginal people are subject to the laws of the Commonwealth, and of the States and Territories ... They have no legislative, executive or judicial organs by which sovereignty might be exercised. If such organs existed, they would have no powers, except such as the laws of the Commonwealth, or of a State or Territory might confer upon them. The contention that there is in Australia an Aboriginal nation exercising sovereignty, even of a limited kind, is quite impossible in law to maintain.”
Likewise, in Mabo (No.2), Dawson J stated:
".... the course of history in ... [the United States] ... finds no real parallel elsewhere and the law in its detailed application is of limited assistance in a case such as the present one."25
Yet, as the Marshall decisions are not the sole source of the obligation, the existence of a fiduciary obligation is not contingent on the acknowledgment or maintenance of an Aboriginal nation exercising sovereignty. On the contrary, loss of sovereignty and the Crown's actions in assuming elaborate control over every aspect of Aboriginal life can equally give rise to the duty. For evidence of this 'elaborate control' in Australia, one needs to go no further than the 738 pieces of legislation that regulated every aspect of the life and culture of Aboriginal people between 1788 and 1987.26
Furthermore, the narrow-minded approach toward the nature of Aboriginal society asserted by Gibbs CJ, has been totally rejected. In Mabo (No.2), the majority emphasised that protection of Aboriginal property would no longer be determined by the conformity of the indigenous cultures system of ownership to western concepts 27
Thus with the nature of traditional society no longer relevant to the determination of native title, and indeed since native title has been acknowledged, Gibbs CJ's exclusion of US precedent, in this area of law, is no longer 'tenable. In fact, in Mabo (No.2), Deane and Gaudron JJ stated
"Indeed as a generalisation, it is true to say that, where they existed, those established entitlements of the Australian Aboriginal tribes or clans in relation to traditional lands were no less clear, substantial and strong than were the interests of the Indian tribes and bands of North America ..."28
There is no longer any logical argument for suggesting that US case law cannot be used to clarify the nature of fiduciary obligations in Australia.
In Hospital Products Ltd v United States Surgical Corporation29 the High Court held that where “one person is obliged, or has undertaken, to act in relation to a particular matter in the interests of another and is entrusted with the power to affect those interests in a legal or practical sense,” and there is a “special vulnerability”, there will be accountability under a fiduciary duty.30 However, the question of whether there is a fiduciary relationship between the Crown and indigenous peoples is yet to be fully tested in Australia. In Mabo (No.2), Toohey J was the only member of the majority to deal at length with the issue of a fiduciary relationship between the Crown and indigenous people.
Interestingly, Dawson-J, who dissented overall, did consider the issue of fiduciary duty. Although, he found that no duty existed because there was no native title on which it could be based, he gave no reasons why it should not exist where there is native title.31
Toohey J, in claiming to be applying the judgment of Dickson J in Guerin, held that a fiduciary duty arose because of the fact that native title to land was inalienable except to the Crown and the corresponding vulnerability which resulted from the limited title 32 More importantly, Toohey J, added:
' ... if contrary to the view I have expressed, the relationship between the Crown and the Meriam people with respect to traditional title alone were insufficient to give rise to a fiduciary obligation, both the course of dealings by the Queensland Government with respect to the islands since annexation .... and the regulation over the Islanders themselves by welfare legislation - would certainly create such an obligation"33
Toohey J has clearly taken the proposition further than Dickson J, who had held that the duty only arose after the land had been surrendered to the Crown. Toohey J argues that the duty arose from the vulnerability of the title itself and, alternatively, the additional factor of the historical course of dealing - an approach closer to that of Wilson J in Guerin.
Toohey J's observations regarding the vulnerable nature of native title are directly analogous to the "elaborate control over property" approach of United States v Mitchell. As a consequence the US cases may prove useful in further articulating the nature of fiduciary obligations.
While none of the other members of the bench substantially addressed the fiduciary duty issue some of their observations appear to be consistent with the existence of such a duty. Brennan J, in a view congruous to that of Dickson J in Guerin stated:
"If native title were surrendered to the Crown in expectation of a grant of a tenure to the indigenous title holders, there may be a fiduciary duty on the Crown to exercise its discretionary power to grant a tenure in land so as to satisfy the expectation, but it is unnecessary to consider the existence or extent of such a fiduciary duty in this case."34
More importantly, comments in the joint judgment of Deane and Gaudron JJ indicate that the duty may, in certain circumstances, stretch as far as a full trust obligation. They argue:
“Not withstanding their personal nature and their vulnerability to wrongful extinguishment by the Crown, the rights of occupation or use under common law native title can themselves constitute valuable property. Actual or threatened interference with their enjoyment can, in appropriate circumstances, attract the protection of equitable remedies. Indeed, the circumstances of a case may be such that, in a modern context, the appropriate form of relief is the imposition of a remedial constructive trust framed to reflect the incidents and limitations of the rights under the common law native title.”35
In light of the recent Canadian recognition of fiduciary duties, the shift in foundations of the fiduciary obligation in the United States, and the strong comments made by Toohey J, Deane and Gaudron JJ, there appears to be an overwhelming legal argument in favour of the existence of such a duty in Australia.
In Guerin, Dickson J had held that, the fiduciary relationship which is owed to native Canadians is sui generis.36
Although, as Johnston points out, the implications of this description are ambiguous,37 US authorities could be indicative of what obligations the fiduciary will be bound by. This may be necessary given that Toohey J also only provided a general description of the content of the fiduciary duty. He observed that:
“ ... to the extent that a person is a fiduciary he or she must act for the benefit of the beneficiaries. Moreover, this general mandate comprises more particular duties with respect to, first, the procedure by which a fiduciary makes a decision or exercises a discretion and secondly, the content of that decision. On the one hand, a fiduciary must not delegate a discretion and is under a duty to consider whether a discretion should be exercised. And on the other hand, a fiduciary is under a duty not to act for his or her own benefit or for the benefit of any third person.”38
Toohey J concluded that
“A fiduciary obligation on the Crown does not limit the legislative power of ... Parliament, but legislation will be a breach of that obligation if its effect is adverse to the interests of the titleholders, or if the process it establishes does not take into account those wishes.”39
If the US lead is followed, a fiduciary duty would prevent Ministers administering statutes in a manner that would interfere with native title 40 In addition, statutes consistent with native title could be enforced affirmatively in favour of protecting native title. Thus, it is possible that where land rights legislation has been enacted, governments may be compelled to act affirmatively to honour statutory intentions. Indeed, in St Paul Inter - Tribal Housing Board v Reynolds, it was noted: "When special or preferential treatment is reasonable and rationally related to the fulfilment of the special trust obligations to Indians, it is permissible differentiation in legitimate public interest rather than prohibited racial discrimination "41
A fiduciary relationship would also extend to individual members of Aboriginal communities.42 This would be consistent with Brennan J's finding, that "communal native title ensures for the benefit of the community as a whole and for the sub-groups and individuals within it who have particular rights and interests in the community's
lands "43
Finally, a fiduciary duty would also ensure that any negotiations regarding native title take place directly with traditional owners or their agents rather than quasi-representative bodies.
Problems may however arise where the Crown has a conflict of duties. This dilemma is exemplified in Kruger v The Queen44 which involved the appropriation of Indian land for the construction of an airport which was justified by two Government departments on the basis that they had equal obligations to the broader community. Urie J applied the rules applying to conflicts of interest in express trusts and found that no conflict arose because "the Crown was in the position that it was obliged to ensure that the best interests of all for whom its officials had responsibility were protected. The Governor in Council became the final arbiter" 45 Unfortunately, Urie J's conclusion assumes that the Crown can readily resolve competing obligations without being "embroiled in a conflict of interest."46 A second view, and the view that appears to be more consistent with the whole rationale of fiduciary duties was put forward by Heald J who stated that:
"... the Federal Crown cannot default on its fiduciary obligation to the Indians through a plea of competing considerations by different departments of Government."47 .
Heald J went on to suggest that a conflict can be avoided if "careful consideration and due weight" is given to the pleas and representations" given on behalf of Indians and there is record of an offer of settlement reflecting those representations being made.48 This latter view would appear to be a more sensible and reasonable approach especially given the sui generis nature of a Crown fiduciary duty to Aboriginal people. It would also be more conducive to the laws of equity which hold a fiduciary liable to the beneficiary regardless of any conflict.49
This is consistent with the approachof Mason J (as he then was) in United States Surgical Corporation v Hospital Products International when he held that a constructive trust would be imposed where there is a conflict of duties or where a profit has been derived from the fiduciary obligation. Indeed, Mason J was at pains to emphasise that it "was no objection to the imposition of a constructive trust that it was not the duty of the defendant to obtain for the plaintiff the profit or benefit in question, the only issue was whether the profit or benefit had accrued to him in breach of his duty ....".50 More importantly,, it is congruous with the comments of Deane and Gaudron JJ in Mabo (No.2), that "the appropriate form of relief is the imposition of a remedial constructive trust framed to reflect the incidents and limitations of the rights under the common law native title."
In addition to being entitled to have the profit madee by the breach of fiduciary relationship held in a constructive trust, Aboriginal people may be entitled to compensation for any consequential loss.51 This may be very high where minerals are involved, where large areas of land are involved, or when the spiritual meaning to the traditional owners is taken into account.
If the High Court and the Australian Government are going to assume that Aboriginal people at some time in the past have ceded sovereignty, (and there is little evidence to support the validity of this assumption), they should acknowledge its full implications. In my opinion a fiduciary duty is one such implication. A developed concept of a fiduciary duty could well be utilised in forcing fair dealing between governments and indigenous people.
In the context of the precedents that have been established in North America and from the comments from the present High Court in Mabo (No.2), it would be difficult to see how any Australian Court could deny the existence of a fiduciary duty to Aboriginal people by Australian governments in regard to native title. The legal argument in favour of such a duty is overwhelming. The fiduciary obligation would arise due to the nature of the vulnerability of native title and the assumption of responsibility by the fiduciary.
A fiduciary duty would act to bind governments to act to protect native title and upon breach make them liable for compensation. This would ensure that native title would not be trivialised and made meaningless by legislation that may purport to extinguish native title ad hoc in favour of mining and pastoral interests, without any consideration of the interests of indigenous peoples. The financial restraint that a fiduciary duty potentially imposes would ensure that extinguishment takes place only when necessary, and only to the extent necessary.
1. Mabo and Others v State of Queensland (No.2) [1992] HCA 23; (1992) 175 CLR 1.
2. See Nason, D., "Peron Moves Against Mabo", The Australian, 4 March 1993, p.2.
3. Mate and Others, op. cit., per Brennan J, at 69-71.
4. As defined in Bird, R, Osbom's Concise Law Dictionary, 7th Ed., Sweet and Maxwell, 1993, at 147.
5. As Chambers articulates, the fiduciary relationship in the U.S has been variously characterised as resembling a 'guardianship': Cherokee Nation v Georgia, (1831) 30 U.S [1831] USSC 6; (5 Pet) 1, a 'guardian-ward' relationship': United States v Mason [1973] USSC 125; (1973) 412 US 391, and as a 'trust responsibility': Seminole Nation v United States [1942] USSC 105; (1942) 316 US 286. See Chambers, R.P., "Judicial Enforcement of the Federal Trust Responsibility to Indians," Stanford Law Review, Vol.27, May 1975, p.1204-5.
6. Cherokee Nation v State of Georgia (1831)30 US(5Pet.)1.
7. Mid, at 17.
8. Worcester v Georgia (1832) 31 US [1832] USSC 39; (6 Pet.) 515.
9. Ibid., at 557.
10. Ibid., at561-562
11. Chambers, R., "Judicial Enforcement of the Federal Trust Responsibility to Indians", Stanford Gnu Review, Vol.T7, May 1975, at 1219.
12. Leventhal, L. B., "American Indians - The Trust Responsibility: An Overview.", Hamline Law Review, Vol.8., October 1985, pp.62&9, quoting Chambers, R., op. cit., at 1213.
13. Lone Wolf v Hitchcock [1903] USSC 10; 187 US 553 (1903).
14 Cromer v United States 261 US 239 (1923).
15. Ibid., at 229.
16. Ibid., at 227.
17. United States v Mitchell [1983] USSC 154; (1983) 103 S. Ct 2961 at 2972.
18. Guerin et al v R (1984) 6 WWR 481.
19. Guerin, op. cit., at 5Ol-3.
20. Ibid., at517. 21. Ibid., at 519.
22. On Wilson's analysis the fiduciary duty "operates to regulate the Crown's management of unsurrendered lands. In this pre-surrender stage, the duty is of a general protective nature. However, upon surrender the fiduciary obligation' crystallises' into' an express trust' for a specific purpose." See Johnston, D., "A Theory of Crown Trust Towards Aboriginal People", Ottawa Law Review, Vol.18,1986, at 317.
23. Slattery, B., The Land Rights of Indigenous Canadian Peoples, as Affected by the Crown's Acquisition of Their Territories (D.Phil., Oxford, 1979) at 125 (Unpublished), cited in Johnston, D., Ibid., at 317-8.
24. Coe v The Commonwealth [1979] HCA 68; (1979) 53 ALJR 403 per Gibbs CJ at 407-8.
25. McCorquodale, J., Aborigines and the Law., A Digest, Australian Institute of Aboriginal Studies Press, Canberra, 1987.
26. Mabo and Others., op. cit., 41-2. 27. Ibid., per Brennan J at 70. 28. Ibid., at 100
29. Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 55 ALR 417. See also, Bartlett, RH, 'The Fiduciary Obligation of The Crown to the Indians", Saskatchewan Law Review, Vol.53.,1989, at 301-2.
30. Ibid.
31. Mabo and Others, op. cit., per Dawson J at 166.
32. Ibid., per Toohey J, at203.
33. Ibid.
34. Ibid, per Brennan J, at 60.
35. Ibid, per Deane and Gaudron fl, at 113.
36. Guerin v The Queen 13 DLR (4th) at 341.
37. Johnston, D., op. cit., at 316.
38. Mabo and Others,(No2), op cit., at 204.
39. Ibid., at 205.
40. Pyramid Lake Paiute Tribe of Indians v Morton 354 F.Supp. 252 (DDC 1972). In that case, the court invalidated a regulation that allowed for water to be diverted away from the reservation even though the regulation did not violate any specific statute or treaty. See also Leventhal, L., op. cit., at 646.
41. St Paul Inter-Tribal Housing Board v Reynolds 564 FSupp.1408 (DMinn 1983) at 1410-11.
42 Morton v Mancari [1974] USSC 132; 417 US 535 (1973).
43. Mabo and Others, op cit., per Brennan J, at 69-71.
44. Kruger v The Queen, 18 March 1985, (FCAD) Unreported, cited in Hurley J, "The Crown's Fiduciary Duty and Indian Tide: Guerin v The Queen", McGill Law Journal, Vol.30, 1985 at 600.
45. Hurley J., Ibid., p.600, quoting Kruger v The Queen, op cit., Per Urie J, at 42.
46. Ibid., at 601.
47 . Hurley J., ibid, quoting Kruger v The Queen, op cit., Per Heald J., at 22.
48. Ibid., at p.46.
49. As Finn articulates: "Irrespective of whether or not a fiduciary obtains the consent of his separate beneficiaries to his double engagement in the same matter or transactions, he leaves himself personally at risk. If he fails to discharge fully the duties he owes to his respective beneficiaries he will be liable to such of them as suffer any loss as a consequence ..." Finn, P.D., Fiduciary Obligations, Law Book Co. Sydney, 1977, at 256.
50. United States Surgical Corporation v Hospital Products International Pty Ltd [1984] HCA 64; (1984) 58 ALJR 587 per Mason J, at 613. See also, Meagher, R, and Gummow, W, Jacob’s Law of Trusts in Australia, 5th Edition, Butterworths, Sydney, 1986, at 303.
51. Walker v Wimborne [1976] HCA 7; (1976) 50 ALJR 446; McKenzie v McDonald [1926] VicLawRp 74; (1927) VLR 134. See also Finn, PD., op. cit., at 256.
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