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Canada v. Williams Lake Indian Band, 2016 FCA 63, Federal Court of Appeal (Gauthier, Ryer and Near JJ.A.)

On a judicial review of a Specific Claims Tribunal determination, the Federal Court of Appeal held that the allotment of lands by Canada to a Band in the 1880s had remedied any previous failures of the Colony of British Columbia to reserve appropriate land for the Band. The Court of Appeal set aside the Tribunal's determination and dismissed the specific claim filed by the Band.

The Williams Lake Indian Band filed a specific claim relating to lands, known as the "Village Lands", in and around Williams Lake, BC. At the heart of the claim were two parcels of land known as District Lots 71 and 72 totalling approximately 1,960 acres. The Lots were surveyed and had been clearly defined since 1883. The Band filed a claim alleging that the Colony of British Columbia had failed to meet its legal obligation to prevent settlers from pre-empting land on the Lots, and that Canada had failed to meet its legal obligations to the Band after British Columbia joined Confederation in 1871.

The Tribunal's decision is reported at 2014 SCTC 3. The Tribunal reviewed the colonial policies developed by the Colony since 1849 on the creation of Indian reserves. In February 1859, Governor James Douglas issued Proclamation No. 13 asserting Crown ownership of all lands in British Columbia, and stating that the Executive had the power to reserve portions of unoccupied Crown lands. There was also evidence of communications from Governor Douglas specifying that certain lands, including Indian villages, would be excluded from pre-emptions by settlers. In January 1860, Proclamation No. 15 took effect. Section 1 of the Proclamation referred to the rights of settlers to acquire unoccupied and unreserved and unsurveyed Crown lands, but included an exception for "an Indian Reserve or settlement ".

In 1860 and 1861, portions of the Lots near Williams Lake were pre-exempted or purchased by settlers. Governor Douglas gave instructions to the local Gold Commissioner and Magistrate to mark out a reserve of 400 to 500 acres for the Band, but this was not done. By 1862, approximately 1,000 acres within the Lots had been pre-empted.

The Joint Indian Reserve Commission (1876-1878) did not deal with the Williams Lake Indian Band or Lots 71 and 72 .

In March 1881, Canada purchased lands in the area of the Village Lands known as the "Bates Estate".

In 1881, newly appointed Indian Reserve Commissioner Peter O'Reilly visited Williams Lake and allotted 14 reserves to the Band totalling between 4,100 and 4,600 acres. The only lands within Lots 71 and 72 included in these reserves were the Bates Estate and some graveyard reserves.

The Tribunal held that the Band had established specific claims based upon events that took place both before and after 1871. The Tribunal found that Canada was liable under s. 14(1)( ) of the SCTA for breaches of legislation and fiduciary duty by the Colony, and liable under s. 14(1)( ) for its own breach of fiduciary duty.

Upon judicial review, the Court of Appeal held that there were four issues:

  • whether there was a breach of legislation by the Colony;
  • whether there was a breach of fiduciary duty by the Colony;
  • if the above breaches occurred, whether they constituted valid claims under s. 14(1)(b) of the Specific Claims Tribunal Act (SCTA); and,
  • if a valid claim was established under s. 14(1)(c) of the SCTA, arising from a breach of fiduciary duty by Canada, whether the subsequent actions of Canada in creating a reserve for the Band remedied any possible earlier breaches by the Colony.

With respect to the first issue, the Tribunal had held that there was a breach of colonial legislation "pertaining to Indians or land pertaining to Indians". Legislation such as Proclamation No. 15 established a pre-emption system for settlers and, in the view of the Tribunal, was "legislation pertaining to Indians or land pertaining to Indians" within the meaning of s. 14(1)(b) of the SCTA The legal effect of such legislation was to protect land, including Indian settlements, from pre-emption. The Lots near Williams Lake should have been protected from pre-emption because they constituted an "Indian settlement". The local Gold Commissioner and Magistrate failed to protect these lands, despite Governor Douglas's instructions. 

With respect to the second issue identified by the Court of Appeal, the Tribunal had held that the Colony was subject to a general fiduciary duty to enforce the statutory prohibition of pre-emptions within Indian settlements, and was bound as a fiduciary to put the Indian interest ahead of the interests of "newcomers". The Tribunal had also held that there was a breach of this fiduciary duty as the Crown did not take even the most basic steps to protect the Village Lands near Williams Lake. The Tribunal had further held that a sui generis fiduciary duty arose requiring the Colony to inquire into the extent of the Band's settlement before permitting pre-emptions because the lands had been provisionally reserved.

Regarding the third issue, the Tribunal had interpreted ss. 14(1)(b) and 14(2) of the SCTA to mean that Canada was liable for breaches of legislation and fiduciary duties by the Colony. 

The fourth issue concerned whether the actions of Canada after 1871 remedied any possible breaches by the Colony. The Tribunal had found that Canada was the "principal actor" in the Crown-Aboriginal fiduciary relationship after 1871, and that the obligations owed by Canada arising out of the honour of the Crown rose to the level of a fiduciary duty. After a review of the evidence, the Tribunal had further held that the policies established by Governor Douglas to protect Indian settlements was the policy of the Colony up to 1871, and had been adopted by Canada under Article 13 of the Terms of Union. In consequence, this policy included the protection of Indian settlements and the authority to move to set aside pre-emptions made contrary to law. The Tribunal therefore held that Canada had a general and sui generis fiduciary duty to the protect the Village Lands, and that it had been in the "best interest" of the Band to allot the Village Lands as a reserve. Although this could not have been done unilaterally by Canada, the exercise of ordinary prudence should have demanded that measures be taken to clear away impediments to the allotment of the Village Lands as a reserve, but federal officials had failed to take the necessary actions. The Tribunal had therefore held that the allotment of lands by Commissioner O'Reilly in 1881 did not remedy the breach of s. 14(1)( ) of the SCTAbut could be relevant to the compensation stage of the analysis.

The standard of correctness applies to the Tribunal's findings on questions of law, but the deferential standard of reasonableness applies to all other findings. The Federal Court of Appeal held that the Tribunal had erred in its approach to the issue of whether Canada's actions had remedied any possible breach of an obligation owed by the Colony. The Tribunal had proceeded upon an erroneous legal principle when it found that Commissioner O'Reilly should not have considered the "reality" that existed in 1881 when considering how to resolve the challenges facing the Band. A balancing of the competing interests was permitted at this pre-reserve stage. The subsequent actions of Canada through the allotment of the reserve lands in 1881, which were accepted by the Band, had remedied any possible earlier breach by the former Colony and thus no liability had been established which could have become the responsibility of the Crown in right of Canada. The Tribunal had reached an unreasonable conclusion based upon the facts of the case.

The Court of Appeal held that the Tribunal's findings were based on two premises: (1) that the best interest of the Band was the allotment of the Village Lands as a reserve and (2) Canada had had a duty to take steps to challenge the sales and pre-emptions that had taken place before 1881.

With respect to the first premise, Near J.A. stated that the Tribunal had made a "bald statement" that the best interest of the Band involved the allocation of the Village Lands as a reserve, without explaining why this was so. A challenge to the validity of those prior sales and pre-emptions would have resulted in further delays in establishing a reserve, when the Band appeared to be in a desperate need of a definite and prompt allocation of land. The evidence indicated that Commissioner O'Reilly and Chief William had spent several days surveying the region, and the Band had ultimately selected thirteen parcels, including the Bates Estate. The lands chosen had included the graveyard sites, as well as land that had little agricultural potential but that had had some significance for the Band. Near J.A. stated:

The Tribunal did not explain why the Band's decision not to select any portion of Lots 71 and 72 that was still public (i.e., about half), aside from the burial grounds, should not be considered when defining the Band's best interests. In fact, if one does not use hindsight, this should be determinative of the Band's views on its best interests in respect of the public lands that remained available within the Lots.

Further, the Court of Appeal held that it cannot be said that there was a breach of fiduciary duty simply because Commissioner O'Reilly had sought to reconcile "the reality that existed on the ground in 1881" when he was seeking to establish a reserve. The Tribunal had erred in finding that Commissioner O'Reilly was not allowed to consider circumstances such as the existence of pre-empted land. Canada had discharged its basic obligations of loyalty and good faith. The Supreme Court of Canada had found in Wewaykum that a balancing of interests was required, and the Crown might wear many hats. Near J.A. stated:

The Tribunal's error in legal principle in determining that Commissioner O'Reilly was not permitted to consider all the circumstances before him tainted its consideration of the facts that surrounded the creation of the reserve. Indeed, the Tribunal seized upon the statement made by O'Reilly in obviously incomplete notes that he would not interfere with "white men's rights" as evidence that he did not act in an honourable fashion towards the Band before the creation of the reserve... In large measure, it is the only reason that the Tribunal gave for concluding that the actions of Canada in creating a reserve for the Band both breached its fiduciary duty to the Band and failed to remedy any possible liability that may accrue to Canada as a result. It seems to me that it would have been irresponsible of Commissioner O'Reilly not to consider the on-the-ground reality when exploring possible ways to resolve a challenging situation that required a timely solution. It is obvious that O'Reilly and Canada concluded that the Province would not agree to void the sales that had already taken place. This explains why O'Reilly indicated that the land issue ought to be settled without interfering with the "white men's rights"...

The Court of Appeal rejected the suggestion that Commissioner O'Reilly was "merely a servant to the interests of the 'white man'", and referred to factors such as the difficulties in dealing with the Province on resolving Indian land claims. A significant fact in this case involved Canada's "highly unusual step" of purchasing and allotting the Bates Estate lands, which were arable and suitable for cultivation. The quantity of land "far exceeded any amount of land that may have resulted had the former colony acted upon its "liberal policy" as set out in Article 13 of the Terms of Union". Near J.A. further held:

Canada's fiduciary duty did not require it to purchase land in order to create a reserve. It did so only to remedy and definitively settle a situation that it did not create, and which, in its view, was unlikely to be redressed by the Province in a timely manner.

O'Reilly was clear that Canada's intention was to remedy the mistakes of the colony. He did ask the Band to be "reasonable", noting that "[t]hey [Canada and the Band] must mutually assist in remedying the mistake"... The terms of Proclamation No. 15 were known to all, including Chief William. Everyone concerned knew that the original pre-emptions were problematic. Chief William and the Band accepted what was proposed by O'Reilly (i.e., the Allotment Lands). It appears that Chief William "expressed himself satisfied and thankful that their land question [was] now settled"...

The Court of Appeal determined that since the subsequent actions of Canada had remedied any possible breaches by the Colony, there remained no breaches that required compensation from Canada. Subsection 14(2) of the SCTA does not provide a separate ground upon which to claim compensation with respect to the Colony. Near J.A. continued:

Put another way, there simply was no liability established. The Tribunal both proceeded upon a flawed principle and reached an unreasonable conclusion based on the facts of this case. Canada was required to act honourably in resolving the long-outstanding challenges of the Band and the evidence shows that Canada and Commissioner O'Reilly did so. As such, there was no breach of a fiduciary duty by Canada. In addition, the subsequent actions of Canada in establishing the reserve through the allotment of the Allotment Lands in 1881 for the Band remedied any possible earlier breaches by the former colony.

Due to the Court of Appeal's finding that Canada remedied any possible earlier breaches by the Colony, it was unnecessary to resolve the other three issues identified by the Court. On the first issue, relating to whether the Colony breached its legislation regarding the protection of Indian settlements from pre-emption, Canada had argued that Proclamation No. 15 did not create a positive legal obligation to ensure that lands claimed by pre-emption did not encroach upon Indian settlements. The Court of Appeal found that the Band's arguments about the duties of the Colony to protect and stake out Indian villages involved an overextension of the pre-emption legislation. Near J.A. stated:

...even if I accepted that one of the purposes of the pre-emption legislation was the protection of Indian settlements, it is questionable whether the legislation itself gives rise to a positive obligation towards the Band on the part of the colony to ensure that the provisions of the legislation were followed. In effect, the Band is asserting that a failure to enforce the provisions of the legislation against all those subject to the legislation amounts to a breach of the legislation itself by the colony. However, it is not necessary for me to decide this issue...

The Court of Appeal also held that it was not necessary to decide whether the Colony had breached a fiduciary duty to the Band. Canada had made various arguments as to how the Tribunal had erred in its findings. Near J.A. stated:

It may well be that a fiduciary relationship existed between the colony and the Band. However, not all obligations between parties in a fiduciary relationship are fiduciary in nature … The issue before this Court is whether the circumstances of this case gave rise to fiduciary obligations, and if so, whether these obligations were breached. In this case, it may be that the combination of Proclamation No. 13 (the assertion of sovereignty), the policy pronouncements in Douglas' speeches at Cayoosh and Lytton, and the pre-emption legislation (Proclamation No. 15), point to a specific cognizable Aboriginal interest and discretionary control on the part of the colony sufficient to give rise to a sui generis fiduciary duty. However, just as in issue 1, it is not necessary for me to decide this issue...

The third issue identified by the Court of Appeal was whether Canada was liable for any breaches by the Colony. The Tribunal had determined that Canada would be liable pursuant to s. 14(2) of the SCTA for any breach of fiduciary duty by the Colony. Canada argued that Article 1 of the Terms of Union between Canada and British Columbia had limited Canada's responsibility to the imposition of monetary debts and liabilities, and not all breaches of legal obligations by the Colony. Near J.A. commented:

The Tribunal conducted a limited analysis of subsection 14(2) and in large measure it simply asserted that the provision is self-evident in concluding that any liability found on the part of the colony flows through to Canada. The Tribunal found that it was unnecessary to address Article 1 of the Terms of Union... which on its face would seem to me not to cover the type of liabilities at issue in this case. Further, the Band's arguments that liability is imposed upon Canada by virtue of subsection 91(24) of the Constitution Act, 1867 or Article 13 of the Terms of Union are difficult to accept given that in this case the lands in question were not transferred by the colony of British Columbia under the Terms of Union . In any event, it is not necessary for me to decide this issue, which in my view is better left for another day. ...

The Court of Appeal also heard submissions from the intervenor Cowichan Tribes about whether lands set apart by the Colony were "reserves" created in accordance with the test articulated in Ross River Dena Council Band v. Canada, 2002 SCC 54. The Court of Appeal held that it was unnecessary to resolve this issue in the present case.

The Court of Appeal concluded that this case was one of the limited instances in which it was appropriate for the Court to substitute its own decision for that of the Tribunal. In light of the circumstances and the evidence in the record, only one result was possible. The decision of the Tribunal was therefore set aside, and the specific claim brought by the Band was dismissed. The parties were ordered to bear their own costs before the Tribunal and the Court of Appeal.



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