Adam Touet Saskatoon Lawyer

Adam Touet Successfully Advocates for First Nation at Federal Court of Appeal

Adam Touet was recently successful at the Federal Court of Appeal (the “Court”) in arguing that the Specific Claims Tribunal committed reviewable errors in its assessment of the Crown’s pre and post-surrender fiduciary duties with respect to First Nation lands. The decision, Kahkewistahaw First Nation v Canada (Crown-Indigenous-Relations), 2024 FCA 8 (“Appeal Decision”), was released January 12, 2024.

Kahkewistahaw First Nation is a signatory to Treaty 4 in Saskatchewan. In 1944 Canada approached the First Nation and requested that they surrender part of their reserve land, IR 72A, for use as a road allowance. Kahkewistahaw First Nation chose to surrender the entire reserve for sale because it wished to use the sale proceeds to purchase or lease land that was more suitable to their needs, including land located closer to the residential school where their children attended.

The Crown has a duty to protect and preserve reserve land and to prevent improvident or foolish bargains on behalf of the First Nation. The Court reviewed precedent jurisprudence and Tribunal decisions in determining that the Tribunal erred in its assessment of whether the Crown discharged its duties in dealing with the surrender and sale of IR 72A.

In conducting its review, the Court affirmed that the sui generis fiduciary duty owed to Indigenous people, “has been held to exist whenever the Crown has discretionary control over a cognizable Aboriginal interest, and particularly with respect to the surrender and expropriation of reserve lands” (Appeal Decision at para 63). From the Appeal decision and its review of the relevant authorities, the following principles emerge:

  • The Crown duty in accepting a surrender of land is “multifaceted” and requires “decision makers tasked with assessing a claim of breach of fiduciary duty to consider facts that go well beyond the existence of consent by the First Nation and whether the bargain was improvident” (Appeal Decision at para 75). The obligation on the Crown includes duties of “loyalty, good faith, full disclosure, protection of the First Nations’ interest in the reserve lands from exploitative or improvident bargains, managing the process in the best interests of the First Nation, and ensuring that the First Nation consents to the surrender” (Appeal Decision at para 75).
  • The nature of the Crown’s obligation is determined by the relevant circumstances and the “terms of the formal written surrender document are not determinative of the scope of the Crown’s fiduciary obligations” (Appeal Decision at para 76).
  • The Crown’s post-surrender fiduciary obligations, “may require it to consider and adjust to changed circumstances relevant to the surrender where the surrendered land has not yet been sold” (Appeal Decision at para 77).
  • Where there has been “a failure to disclose relevant facts, any consent given to the surrender is not an informed one, and therefore cannot be valid” (Appeal Decision at para 81).
  • Where there has been a relevant change in circumstances prior to sale of the land, the Crown “must consult with the First Nation before proceeding” (Appeal Decision at para 83).

Pre-Surrender Fiduciary Duties

The Court concluded that the Tribunal’s decision was unreasonable when it did not consider facts relevant to the First Nation’s understanding of the terms of the surrender and characterized certain facts in a manner inconsistent with the prevailing case law. For instance, Kahkewistahaw First Nation had no need to sell IR 72A in order to purchase or lease more suitable land because the First Nation held funds in their capital account that “appears to have far exceeded the cost of purchasing an equivalent amount of alternate land” (Appeal Decision at para 18). There is no record of the Crown explaining to the First Nation that they had no monetary need to sell their land in order to purchase more suitable land. The record also shows that government agents were well aware of the financial benefit of leasing IR 72A rather than selling it, but that the option of leasing and its potential merits was not explained to the First Nation. Also, between the time of the surrender and the actual sale of IR 72A years later, the circumstances of the First Nation changed and the First Nation no longer had the same interest in purchasing different land. Yet, the Crown took no steps to consult with the First Nation as to whether selling the land remained in their interest and to their benefit.

The Tribunal concluded that, despite the above circumstances, the First Nation’s understanding of the surrender was not inadequate for a number of reasons. In reaching its decision, the Tribunal noted that the surrender document clearly stated that the lands were surrendered for sale, the impetus for the surrender of the entire reserve came from the First Nation itself, and the Tribunal inferred that the First Nation would have known how much funds it held in its capital account. The Tribunal further characterized the comments of two government officials on the benefits of leasing rather than selling the land as merely the views of two individuals. The Tribunal concluded that, “while the Crown could have communicated further details to the [KFN] at the time they expressed their desire to sell IR 72A, its failure to do so falls short of breaching its pre-surrender fiduciary obligation to avoid an unconscionable bargain” (Tribunal Decision at para 51, cited in the Appeal Decision at para 44).

On appeal, the Court disagreed with the Tribunal’s assessment of the facts in relation to the relevant authorities and rejected the characterization of the communication between government officials. The Court determined, that “[i]n the absence of any discussion by the Crown with the [First Nation] of the comparative value of leasing versus sale […] it is impossible to conclude that the [First Nation] had an adequate understanding of the terms or that appropriate disclosure was made by the Crown” (Appeal Decision at para 89).

Post-Surrender Fiduciary Duty

The Tribunal decision found that Canada did not have a duty to consider leasing IR 72A, instead of selling the land, because, in part, the First Nation had surrendered the land for sale and the term was clearly set out in the surrender document. The Tribunal further concluded that Canada did not have a duty to re-visit the sale of IR 72A by consulting with the First Nation, despite the passage of years, on the basis that the delay did not create a duty to consult the First Nation.

The Court, again, disagreed. The Court concluded that the Tribunal’s characterization of the facts was unreasonable and, following a review of the prevailing authorities, held that, “it is clear from this line of jurisprudence that the Crown does not discharge its fiduciary duty by merely acting on the terms contained in the surrender document” (Appeal Decision at para 97). In this case, given the intervening years during which the Crown failed to sell the land, the “reason that promoted the surrender in the first place may well have disappeared” (Appeal Decision at para 98) and that the Crown ought to have consulted the First Nation before proceeding with the sale; “[i]t was unreasonable for the Tribunal to have concluded that all that had transpired in the intervening years was the mere passage of time” (Appeal Decision at para 99).

The Federal Court of Appeal set aside the Tribunal Decision and remitted it back to the Tribunal for redetermination.

This case has clarified the nature of the Crown’s sui generis fiduciary duties with respect to its dealings with First Nation reserve land. The Appeal decision validates the necessity to consider all relevant circumstances when deciding whether the Crown fulfilled its fiduciary duties.