Guerin v. Can. (1984), 55 N.R. 161 (SCC)
MLB headnote and full text
Guerin et al. on their own behalf and on behalf of all other members of the Musqueam Indian Band v. Canada and National Indian Brotherhood (intervener)
Indexed As: Guerin v. Canada
Supreme Court of Canada
Laskin, C.J.C., Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson, JJ.
November 1, 1984.
Summary:
The Counsel of the Musqueam Indian Reserve No. 2 in Vancouver surrendered 162 acres of the reserve to the Government of Canada for lease to a golf club in 1967. Proposed terms of the lease were discussed among the Band Council, government officials and the golf club before the surrender, but the terms were not settled between the government and the golf club until after the surrender. The terms were much less favourable than those the Band understood would be obtained. When the Band finally with great difficulty obtained the terms of the lease, it brought an action in 1975 against the Government for damages for breach of trust in failing to obtain reasonable terms of lease.
The Federal Court of Canada, Trial Division, in a judgment unreported in this series of reports allowed the action and awarded the Band ten million dollars damages. The Government appealed.
The Federal Court of Appeal in a judgment reported 45 N.R. 181; 143 D.L.R.(3d) 416, allowed the appeal and dismissed the action on the ground that the surrender to the Government of Canada did not establish a legally or equitably enforceable trust. The Band appealed.
The Supreme Court of Canada unanimously allowed the appeal and restored the trial judgment.
Dickson, J., with Beetz, Chouinard and Lamer, JJ, concurring, held that because the land was inalienable except upon surrender to the Crown, which had a broad discretion in dealing with surrendered land, the surrender created an equitable or fiduciary duty in the Crown to deal with the land for the benefit of the Indians. Although the terms upon which the Band was prepared to surrender the lands were not incorporated in the surrender, the Band was induced by the discussed terms to surrender the land and it was unconscionable that the Government ignored them and reached a less advantageous agreement without returning to the Band for consultation. Damages should be awarded as if for breach of trust. See paragraphs 1 to 69.
Wilson, J., with Ritchie and McIntyre, JJ., concurring, was of the opinion that an express trust was created upon surrender and that the Government breached the trust by reaching a less advantageous agreement without returning to the Band for consultation. In accordance with trust principles damages should be assessed as of the date of trial, not the breach, giving the band credit for any increase in the value of the land. See paragraphs 70 to 120.
Estey, J., was of the opinion that the matter could be determined upon agency principles, finding the government liable for breach of its agency on behalf of the band. See paragraphs 128 to 137.
Damages – Topic 4001
Interference with economic relations – Breach of fiduciary relationship – General – The Government of Canada breached its fiduciary duty to an Indian Band in leasing surrendered Indian land on disadvantageous terms – The Supreme Court of Canada awarded damages on the basis of breach of trust rules and assessed damages as of the date of trial, not the date of breach – The court held that it was presumed that the Band would have developed the land in the most advantageous way, giving the Band credit for appreciation of the value of the land in the meantime – See paragraphs 68, 111 to 123.
Equity – Topic 3606
Fiduciary or confidential relationship – Fiduciary relationship – What constitutes – The Supreme Court of Canada held the surrender of reserve land by an Indian Band to the Crown for the purpose of leasing it to third parties created a fiduciary or equitable duty in the Crown to deal with the land for the benefit of the Indians – The court held that the fiduciary duty depended upon the proposition that the Indian land was inalienable except upon surrender to the Crown which in turn had a wide discretion in dealing with the land – See paragraphs 33 to 36.
Fraud and Misrepresentation – Topic 8
Fraudulent misrepresentation – Equitable fraud – What constitutes – The Government leased surrendered Indian land on less advantageous terms than the Indians expected without consulting them, then for twelve years refused to give the Indians a copy of the lease – The Supreme Court of Canada held that the Government’s conduct constituted equitable fraud and prevented the limitation period for an action against the Government from running – The court defined equitable fraud as conduct which, having regard to some special relationship between the two parties concerned, is an unconscionable thing for the one to do towards the other – The court held that it was not necessary for the fraudulent concealment to amount to deceit or common law fraud – See paragraphs 65 to 66, 108 to 110.
Indians, Inuit and Métis – Topic 5466
Lands – Surrender of lands – Effect of – An Indian Band surrendered reserve land to the Government for lease to a third party – The Supreme Court of Canada held that, because the reserve land was inalienable except upon surrender to the Government, which had a wide discretion in dealing with the land after surrender, the surrender created an equitable fiduciary duty in the Government to deal with the land for the benefit of the Indians – The court held that the Government breached its duty in accepting without further consultation with the Indians a lease which was less advantageous than the terms the Indians expected in agreeing to surrender the land.
Indians, Inuit and Métis – Topic 5479
Lands – Surrender of lands – Form of – An Indian Band agreed to surrender reserve land to the Government for lease to a third party on certain terms – The surrender did not incorporate the understood terms and the Government subsequently reached a lease considerably less advantageous – The Supreme Court of Canada held that, although the agreed upon terms were not part of the surrender, the terms induced the Indians to surrender their land and it would be unconscionable and intolerable in equity to permit the Government to ignore the terms – See paragraphs 61 to 64.
Indians, Inuit and Métis – Topic 5505
Lands – Reserves – Title – The Supreme Court of Canada held that Indian title to reserve land is a preexisting legal right, which is not dependent upon the Royal Proclamation of 1763 – The court held that Indians have a legal right to occupy and possess certain lands, the ultimate title to which is in the Crown – The court held that describing the interest as beneficial or personal and usufructuary was not accurate and that the nature of the Indians’ interest is best characterized by its general inalienability coupled with the Crown’s obligation to deal with the land on the Indians’ behalf when the interest is surrendered – See paragraphs 37 to 48.
Indians, Inuit and Métis – Topic 5506
Lands – Reserves – Nature of Indian interest in – The Supreme Court of Canada held that Indians have a legal right to occupy and possess certain lands, the ultimate title to which is in the Crown – The court held that describing the interest as beneficial or personal and usufructuary was not accurate and that it was best characterized by its general inalienability coupled with the Crown’s obligation to deal with the land on the Indians’ behalf when the interest is surrendered – See paragraphs 42 to 48.
Limitation of Actions – Topic 9428
Bars – Disallowance of defence – Considerations – Fraudulent concealment – The Government leased surrendered Indian Reserve lands on terms less advantageous than those used to induce the Indians to surrender the land, then for twelve years refused to give the Indians a copy of the lease – The Indians brought an action against the Government five years after learning of the terms – The Government pleaded that the action was barred for not being brought within six years of the lease – The Supreme Court of Canada, held that the Government’s conduct in concealing the lease’s terms constituted equitable fraud and prevented the period of limitations from running until the Indians learned of the terms – See paragraphs 65 to 66.
Cases Noticed:
Tito v. Waddell (No. 2), [1977] 3 All E.R. 129, dist. [paras. 21, 40, 93, 95, 98].
Kinloch v. Secretary of State for India (1882), 7 App. Cas. 619, dist. [paras. 21, 40, 93, 95, 98].
Fales et al. v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302; 11 N.R. 487, refd to. [paras. 26, 112].
Calder v. Attorney General of British Columbia, [1973] S.C.R. 313, appld. [paras. 37, 91].
St. Catherine’s Milling and Lumber Co. v. R. (1888), 14 App. Cas. 46, consd. [paras. 38, 42, 91, 129].
Johnson v. McIntosh (1823), 8 Wheaton 543, consd. [para. 38].
Worcester v. State of Georgia (1832), 6 Peters 515, consd. [para. 38].
Amodu Tijani v. Secretary of State, Nigeria, [1921] 2 A.C. 399, consd. [para. 40].
Attorney General of Quebec v. Attorney General of Canada (Star Chrome Case), [1921] 1 A.C. 401, appld. [para. 41].
Star Chrome Case, [1921] 1 A.C. 401, appld. [para. 41].
Smith v. Canada, [1983] 1 S.C.R. 554; 47 N.R. 132, refd to. [paras. 44, 91, 129].
Attorney General of Canada v. Giroux (1916), 53 S.C.R. 172, consd. [para. 46].
Cardinal v. Attorney General of Alberta, [1974] S.C.R. 695, consd. [para. 46].
Western Industrial Contractors Ltd. v. Sarcee Developments Ltd., [1979] 3 W.W.R. 631; 15 A.R. 309, consd. [para. 46].
Miller v. R., [1950] S.C.R. 168, consd. [para. 46].
Laskin v. Bache & Co. Inc. (1972), 23 D.L.R. (3d) 385 (O.C.A.), refd to. [para. 54].
Goldex Mines Ltd. v. Revill (1974), 7 O.R.(2d) 216 (O.C.A.), refd to. [para. 54].
Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, appld. [para. 58].
Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91, refd to. [para. 58].
Central London Property Trust Ltd. v. High Trees House Ltd., [1947] 1 K.B. 130, refd to. [para. 63].
Robertson v. Minister of Pensions, [1949] 1 K.B. 227 (C.A.), refd to. [paras. 63, 104].
Kitchen v. Royal Air Force Association et al., [1958] 1 W.L.R. 563, appld. [paras. 66, 109].
West of England and South Wales District Branch ex. p. Dale & Co. (1879), 11 Ch. D. 772, appld. [para. 68].
Civilian War Claimants Association Ltd. v. R., [1932] A.C. 14, dist. [para. 96].
Hereford Railway Co. v. R. (1894), 24 S.C.R. 1, dist. [para. 96].
Lever Finance Ltd. v. Westminster (City) L.B.C., [1971] 1 Q.B. 222 (C.A.), refd to. [para. 104].
Toronto Dominion Bank v. Uhren (1960), 32 W.W.R.(N.S.) 61 (Sask. C.A.), appld. [para. 112].
Dawson, Re; Union Fidelity Trustee Co. Ltd. v. Perpetual Trustee Co. Ltd. (1966), 84 W.N.N.S.W. 399, appld. [para. 119].
Bartlett v. Barclays Bank Trust Co. Ltd. (No. 2), [1980] 2 All E.R. 92 (Ch.), appld. [para. 120].
McNeill v. Fultz (1906), 38 S.C.R. 198, refd to. [para. 121].
Penvidic Contracting Co. Ltd. v. International Nickel Co. of Canada Ltd., [1976] 1 S.C.R. 267; 4 N.R. 1, refd to. [para. 123].
Ontario Mining Co. v. Seybold, [1903] A.C. 73, affirming (1899), 31 O.R. 386, refd to. [para. 129].
St. Ann’s Island Shooting and Fishing Club Ltd. v. R., [1950] S.C.R. 211, refd to. [para. 131].
Surrey (Corporation of) v. Peace Arch Enterprises Ltd. (1970), 74 W.W.R.(N.S.) 380 (B.C.C.A.), refd to. [para. 132].
R. v. McMaster, [1926] Ex. C.R. 68, refd to. [para. 132].
Statutes Noticed:
Constitution Act, 1867, sect. 109 [para. 43].
Indian Act, R.S.C. 1970, I-6, sect. 18(1) [para. 27]; sect. 37, sect. 38, sect. 39, sect. 40, sect. 41 [para. 50].
Royal Proclamation of 1763, R.S.C. 1970, App. 123, p. 127 [para. 37].
Statute of Limitations, R.S.B.C. 1960, c. 370 [para. 65].
Trustee Act, R.S.B.C. 1979, c. 414, sect. 98 [para. 109].
Authors and Works Noticed:
Halsbury’s Laws of England (4th Ed.), vol. 1, p. 418 [para. 134].
Underhill’s Law of Trusts and Trustees (13th Ed. 1979), pp. 702 to 703 [para. 120].
Waters, The Law of Trusts in Canada (1974), pp. 843 to 845 [paras. 120 to 121].
Weinrib, Ernest, The Fiduciary Obligation (1975), 25 U.T.L.J. 1, 7 [para. 52].
Counsel:
M.R.V. Storrow, J.I. Reynolds and L.F. Harvey, for the appellants;
W.I.C. Binnie, Q.C., M.R. Taylor and M. Freeman, for the respondent;
B.A. Crane, Q.C., W. Badcock and A.C. Pape, for the intervener.
This case was heard on June 13 and 14, 1983, at Ottawa, Ontario, before Laskin, C.J.C., Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson, JJ., of the Supreme Court of Canada.
On November 1, 1984, the judgment of the Supreme Court of Canada was delivered and the following opinions were filed:
Dickson, J. – see paragraphs 1 to 69;
Wilson, J. – see paragraphs 70 to 127;
Estey, J. – see paragraphs 128 to 137.
Beetz, Chouinard and Lamer, JJ., concurred with Dickson, J.
Ritchie and McIntyre, JJ., concurred with Wilson, J.
Laskin, C.J.C., took no part in the judgment.
