Tag Archives: Treaty obligations

Lac Seul First Nation v Canada, 2017 FC 906

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Wiyasiwewin Mikiwahp Native Law Centre Case Watch

Canada breached its fiduciary duty to the Plaintiffs and must pay equitable damages of $30 million; third party claims against Ontario and Manitoba dismissed.

The Lac Seul First Nation [LSFN] claimed that Canada breached its treaty with the LSFN (Treaty No. 3), the Indian Act, and its fiduciary duties and obligations. LSFN sought damages from Canada for losses from the flooding of part of the LSFN Reserve following the construction of the Ear Falls Storage Dam where Lac Seul drains into the English River. LSFN requested punitive damages and costs along with equitable compensation for a loss of opportunity for hydroelectric benefits, past present and future, in the amount of $506.6 million including avoidable losses due to erosion, loss of timber and community infrastructure in the amount of $40 million.

The Lac Seul Storage Project provided the water reservoir necessary to permit power generation for the City of Winnipeg and Northwestern Ontario. In 1929, the Ear Falls Storage Dam was completed, as part of a project to maximize the potential for hydroelectric developments on the Winnipeg River in Manitoba to provide power to the City of Winnipeg. The parties agreed that this part of the LSFN Reserve land is now under water. With the flooding, the LSFN lost the use and enjoyment of this portion of its Reserve. Other impacts from flooding on the LSFN included lost houses, wild rice fields, and the separation by water of two of its communities, Kejick Bay and Whitefish Bay.

Ultimately the Court assessed the Plaintiffs’ equitable damages at $30 million. The factors considered included the amount of the calculable losses and that many of the non-quantifiable losses created in 1929 persisted over decades, and some still continue. The failure to remove the timber from the foreshore created an eyesore and impacted the natural beauty of the Reserve land. This created a long-term water hazard effecting travel and fishing for members of the LSFN. The flooding negatively affected hunting and trapping. Although Canada supplied the materials to build the replacement houses, the LSFN members supplied their own labour. The LSFN docks were not replaced, as well hay land, gardens and rice fields were destroyed. Two LSFN communities were separated by water and one became an island, impacting the ease of movement of the people who lived there. Canada failed to keep the LSFN informed and never consulted with the band on any of the flood related matters that affected it, creating uncertainty and anxiety for the band. Canada failed to act in a prompt and effective manner to deal with compensation with the LSFN prior to the flooding and many years after the flooding, despite being aware of the negative impact on the band members.

It was determined that this $30 million in equitable compensation would be sufficient to put LSFN back in the place they would have been but for the breach and would meet the objectives of retribution, deterrence, and denunciation, as there have been no punitive damages awarded in an Aboriginal law context. A declaration was also sought that the LSFN legal interests in the flooded lands and the freeboard area have not been encumbered or extinguished. Canada admitted and accepted that LSFN had “retained the flooded Reserve lands.” A declaration would therefore serve no purpose. Canada claimed a defence of laches, but this defence does not apply as the trial record revealed a singular failure of Canadian government departments to communicate with the members of the LSFN. Similarly, the decisions made regarding the cutting of timber on the foreshore, the use of the unemployed men as a relief project, and its later abandonment were events that also occurred with little or no communication with the LSFN. Lastly, the negotiation of a payment to the LSFN was done in 1943 and accepted by Canada with no evidence that the LSFN was ever informed of the structure of the settlement, or its amount.

It is inexplicable in the evidence as to why Canada took no steps either at the time of the first flooding or subsequently to legally authorize the expropriation through flooding of these Reserve lands. Moreover, no compensation was paid to LSFN relating to the flooded lands or consequent damages suffered until November 17, 1943, which was not an appropriate amount and was in breach of Canada’s fiduciary duty to LSFN. Canada defended the main action and commenced third party claims against both Ontario and Manitoba for contribution and indemnity, pursuant to the terms of the Lac Seul Conservation Act (Canada) and An Act Respecting Lac Seul Storage (Ontario). Where the third parties have no fiduciary duty to the beneficiary, the defendant cannot apportion its liability for equitable compensation to them. Canada is not being asked to pay more than its share of the losses as it is solely responsible for them.

Northern Inter-Tribal Health Authority Inc. and Peter Ballantyne Cree Nation Health Services Inc. v Attorney General of Canada (Minister of Finance), 2018 FC 1180 [NITHA]

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Wiyasiwewin Mikiwahp Native Law Centre Case Watch

The Federal Government has a long-standing obligation to provide health services to First Nations. The Applicants pension plans fall under federal jurisdiction.

In NITHA, the Federal Court considered whether the pension plans of the applicants, Northern Inter-Tribal Health Authority Inc. (NITHA) and Peter Ballantyne Cree Nation Health Services Inc. (PBCNHS), fell under federal or provincial jurisdiction. The Office of the Superintendent of Financial Institutions of Canada (OSFI), argued that the pension plans fall under provincial jurisdiction, while NITHA and PBCNHS argue that they fall under federal jurisdiction. Applying the two-part test articulated by the Supreme Court in NIL/TU, O, the Court declared that the pension plans in question fall under federal jurisdiction.

The Court concluded that a correctness standard of review was to be applied on the grounds that the dispute engaged a question of a constitutional nature. NIL/TU, O and Nation Innu Matemekush-Lac John supports that constitutional issues regarding the division of powers are to be decided on a correctness standard.

The applicable test identified as outlined by Abella J in NIL/TU, O, contains two parts. The first part is a functional test of whether the entity is engaged in a federal undertaking. This requires an inquiry into the nature, habitual activities and daily operations of the entity in question. The second part applies only if the first part is inconclusive and it requires consideration of whether provincial regulation would impair the core federal power. The Court also reiterated Abella J’s citation to Four B Manufacturing Ltd, which indicates that federal government funding does not on its own convert the operation into a federal activity.

The functional test calls for an inquiry into the nature, habitual activities and daily operations of the entity in question to determine whether it constitutes a federal undertaking. In examining the Supreme Court’s application of the functional test in NIL/TU, O, the Court highlighted Abella J’s position that the emphasis be placed on the underlying reason for the performance of the activities. The Court also echoed McLachlin CJC and Fish J’s concern in Four B Manufacturing Ltd that the test must be applied cautiously to avoid simply conflating the nature of activities with the habitual and daily operations involved in carrying out an activity.

The Court concluded that OSFI made an error by failing to consider the underlying reason for the activities. In particular, the fact that OSFI narrowly construed the purpose of the agreements governing the relationship, by referring to some recitals and excluding others which make reference to constitutional provisions, the special relationship subsisting between First Nations People and the Crown as well as important historical documents, such as Treaties 5, 6, 8 and 10, which include promises of healthcare. These treaties make it clear that the Federal Government undertook to provide health services to Indians on Indian Reserves.

On this basis, the Court granted the application for certiorari to quash OSFI’s decision. These arguments, along with a further examination of the historical treaty record, were also used to support a declaration that the provision of health services to the Indians is a century long federal undertaking made, in part, in keeping with the treaty relationship between the Applicants and the Federal Government.