Judicial Committee of the Privy Council –  A.C.
This case is one of the first Canadian cases concerning the property of lands and the payment of annuities to Indians.
The Privy Council decided that the obligation to pay annuities to Aboriginals stems from the relationship they have with the Crown, and not from the property of the lands.
A distinction must be made between the obligations of an owner and the obligations that stem from legal jurisdiction.
Between the province and the Dominion, which one is liable for the increased amount of the Indian annuities?
The promises made by Canada constitute personal obligations that are only binding on the Dominion of Canada. Therefore, the province is not bound to pay the annuities promised by the federal government (unanimous decision).
Between: Canada and Quebec
In 1850, the Ojibway Indians living in the Lake Huron and Lake Superior area ceded their lands by treaty to the Province of Canada. In exchange, they received a large settlement. They were also promised a perpetual annuity to be paid by the provincial government. If the ceded lands had excess revenues, the Government had to increase their annuities.
The Dominion of Canada was born under the British North America Act of 1867. The Province of Canada was divided into two provinces, Ontario and Quebec. Section 109 of this Act gave the provinces jurisdiction over the Crown lands situated within their boundaries. Section 111 transferred the debt of the Province of Canada to the Dominion. However, if the debt exceeded a certain amount, the provinces of Ontario and Quebec owed Canada the excess (s. 112).
In 1873, the Ojibway tribe claimed an increase in their annuities based on the fact that the ceded lands generated an amount sufficiently substantial as to enable the Government to pay the increase without incurring a loss. The Dominion claimed that it was now Ontario that was responsible for the payment of the increased amount to the Ojibway Indians because it owned the ceded lands.
In 1890 and 1891, the Dominion, Ontario and Quebec appointed three arbiters to settle the question of the liability for the increased annuities. In 1895, the arbiter found Ontario liable for the increased annuities.
The Dominion of Canada: The trust and interest in favour of the Indians was carried over by the transfer of the beneficial interest over the ceded lands to Ontario, which in turn should perform the associate duties. It further argued that since the province was granted the benefit of the increased value and profits of the land, it was reasonable that it should assume responsibility for the increased annuities stemming from those increased profits. The Province of Quebec supported the arguments of the Crown.
The Province of Ontario: It was not the intent of the initiators of the treaties to establish a charge or trust affecting the ceded lands. Even if the Court were to conclude as to the establishment of a trust or interest in the lands, it would only be for the interests of the Indians, and would not affect “the liabilities either of the old Province of Canada and the Dominion or of the various governments as between themselves in the ultimate adjustment of their accounts” (p. 204).
The arbiters (1895): Since Ontario now owned the ceded lands under s. 109 of the British North America Act, the province is liable for the payment of the increased annuities.
The Supreme Court of Canada (1895): By a decision of 3 to 2, it overturned the arbitration decision. Ontario is free from any trust, charge or lien in regard to the annuities; therefore, it is not liable for the increased annuities.
Lord Watson, Lord Hobhouse, Lord Morris and Sir Richard Couch
The treaties never gave the Ojibway tribe the right to receive annuities from the government of Ontarios or to ask for increases. The promise made by the Governor was merely a personal obligation binding only him.
Even if Ontario now holds the beneficial interest over the Crown lands, the treaties never imposed a duty on the owner of the ceded lands to give the surplus of revenue to the Ojibway tribe by a payment of annuities.
The annuities must be paid by Canada.
The Guerin case redefined the interpretation of this ruling by discussing, for the first time, the fiduciary obligation of the Crown towards Aboriginals (Hurley, 1985).
In the Guerin ruling, the Court established that the fiduciary obligation is rooted in the provisions of the Royal Proclamation, 1763. Although the Crown was unaware of this obligation at the time of signing of the treaty with the Indians, and notwithstanding its lack of recognition before 1984, the fiduciary duty guarantees the historical promises made by the Crown and limits its capacity to unilaterally change treaties, years later (Rotman, 1997).
Daniels v. White,  S.C.R. 517
HURLEY, John. The Crown’s Fiduciary Duty and Indian Title: Guerin v. The Queen. 1985. In revue de droit de McGill. Online: http://lawjournal.mcgill.ca/documents/30/3/hurley.pdf. Accessed July 31, 2013
R.D. Lump, Constitutional Issues Relating to the Process of Reconciliation with Aborigines and Torres Strait Islanders in Queensland Law Journal, 1992 (on HeinOnline)
ROTMAN, Leonard. 1997. Hunting for Answers Strange Kettle of Fish : Unilateralism, Paternalism and Fiduciary Rhetoric in Bager and Van der Peet. In University of Alberta-Consitutional Forum. Online: https://ejournals.library.ualberta.ca/index.php/constitutional…/9210. Accessed July 31, 2013.
TORRELLI, Maurice. 1974. Les Indiens du Canada et le droit des traités dans la jurisprudence canadienne. In Annuaire français de droit international, volume 20, 1974. pp. 227-249. Online: http://www.persee.fr/web/revues/home/prescript/article/afdi_0066-3085_1974_num_20_1_2269. Accessed July 31, 2013.