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Thomas
Posted by Mr. Thomas Richard M. on Feb 6th, 2017 11:37am

Facts: This appeal is about the Crown’s fiduciary duty vis-à-vis surrendered reserve land. An Indian Band surrendered reserve land to the Crown pursuant to the Indian Act for the purpose of leasing the land. A surrender document was prepared setting out the approved terms of the lease, but the Crown replaced the approved terms of the lease without the approval of the Indian Band with terms that were much less favourable to the Band. The TJ found the Crown in breach of trust and awarded substantial damages. The Crown appealed to the FCA who ruled in the Crown's favour and set aside the TJ's judgment. The Indian Band appealed to the SCC.

Issue: Whether the Indian Band is entitled to recover damages from the Crown?

Holding: Appeal allowed. FCA judgment set aside. TJ judgment re-instated.

Reasoning:

Per Dickson, Beetz, Chouinard & Lamer JJ. (p.339-364): The Indian Band’s interest in the surrendered reserve land is defined by its inalienability to any party other than the Crown, and also the Crown’s obligation to deal with the surrendered reserve land on the Indian Band’s behalf whence surrendered. The inalienability to any party other than the Crown exists to prevent the Indians from being exploited from its reserve land. The Crown has a historic responsibility to protect the interests of Indians in transactions with third parties, and such responsibility includes a discretionary power on the Crown to decide where the Indians best interests lie. Such an obligation, along with such discretion, places the Crown in the position of a fiduciary, and the law of equity supervises the relationship.

Wilson, Ritchie & McIntyre (p.364-391): The Crown owes a fiduciary duty to the Indian Band arising from the Crown’s control over the use to which reserve lands could be put. The Crown’s discretion in deciding these uses was limited to those which were ‘for the benefit of the Band’. This fiduciary duty exists independently, and crystallized into an express trust of the land for the purpose specified by the Indian Band.

Estey J. (p.391-395): The action should be disposed on basis of law of agency because the result are the same, and it is simpler to understand, but agree with the above. 

Rule:

Surrendered Reserve Land pursuant to the Indian Act: When an Indian Band surrenders its interest in its reserve land to the Crown, a fiduciary obligation regulates the manner in which the Crown exercises its discretion in dealing with the surrendered reserve land on the Indian Band’s behalf.

Damages:The law of equity presumes the Indian Band would have wished to develop the reserve land in the most advantageous way possible during the period covered by the unauthorized lease; the TJ properly approached the quantum of damages on this basis. 

Application:

Surrendered Reserve Land pursuant to the Indian Act: The Indian Act prevents reserve land from being sold alienated, leased or otherwise disposed to any party other than the Crown i.e. it can only be surrendered (alienated) to the Crown. Once surrendered, the Crown is interposed between the Band and a third party, thus placing the Crown a in a trust-like capacity. In this capacity, the Crown is under a fiduciary duty to act in the Band’s best interests, which is a relationship governed by the law of equity.

Damages: The Crown committed the Band to an unauthorized long-term lease which deprived the Band of the opportunity to use the land for any other purpose, such as the lost opportunity for a more favourable lease, which was in waiting. The damages are the actual loss the Crown’s acts caused to the Band during the time of the unauthorized lease. The Band being is entitled to be placed in a position so far as possible as if there had been no breach of trust.

Dissenting Opinion(s) Reasoning: None.


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