Supreme Court of Canada –  2 S.C.R. 335
The Guerin decision is one of the most significant in the history of Aboriginal law. It recognized that the Crown has a fiduciary duty towards Aboriginals and their lands, and reaffirmed the existence of Aboriginal title in Canada subsequent to Calder.
Did the Crown breach its fiduciary duty to the Musqueam Band of Indians by agreeing to a lease with conditions less favourable than those accepted by the band members, and if so, this breach be sanctioned in a court of law?
The Crown has a fiduciary duty towards Indian bands, and this obligation can be sanctioned in a court of law (unanimous decision).
Between: Delber Guerin, Joseph Becker, Eddie Campbell, Marg Charles, Gertrude Guerin and Gail Sparrow on their behalf and on behalf of the members of the Musqueam Indian Band
And: The Crown of Canada
Intervener: National Indian Brotherhood
The reserve of the Musqueam Band of Indians of British Columbia spans over 416.53 acres and is situated within the limits of Vancouver.
In the mid-1950s, the Department of Indian Affairs recognized the high value of the Musqueam lands and undertook a study to identify whether there were any surplus lands which could be used to benefit the Band. A survey of the lands and a long-term plan for land development were also commissioned.
In 1957, the president of the Shaughnessy Heights Golf Club of Vancouver wrote to Mr. Anfield, District Superintendent of the Indian Affairs Branch, submitting a plan for the lease of 160 acres of the Indian reserve. Other developers made their interests known to Indian Affairs but these were never communicated to the Band. Negotiations for the surrender and lease of the reserve land took place between April and December of the same year.
The Band was briefly informed of the content of the agreement. Chief Sparrow voiced some objections to the amount of the annual rent and to the imposition of a rent cap, which he found to be too low. The future lessee’s representation opposed them, but eventually settled on $29,000/year in exchange for a term of 10 years to be renegotiated every 5 years. The Band, gathered in an assembly, accepted these conditions. The Crown accepted the surrender of 162 acres of the Musqueam Band’s lands on December 6 in accordance with sections 37 to 41 of the Indian Act.
In 1958, there was an exchange of correspondence between Anfield and Indian Affairs staff concerning the Band’s demands. None of this correspondence was communicated to the Band. The lease was signed on January 22, and provided for a term of 75 years, with annual rent of $29 000 for the first 15 years, and renegotiations every 15 years after that. The maximum increase of rent for the second 15-year span (from January 1, 1973 to January 1, 1988) was limited to 15% of $29 000.
In 1970, the Musqueam Band received a copy of the lease and realized that its terms were not the same as the terms to which they had consented in their assembly. As a result, the Musqueam Council members Delber Guerin, Joseph Becker, Eddie Campbell, Marg Charles, Gertrude Guerin and Gail Sparrow filed a suit for breach of fiduciary duty on their behalf and on behalf of all the members of the Band.
Musqueam Band of Indians: Section 18 (1) of the Indian Act imposes fiduciary duties on the Crown which are enforceable by a court of law and are not purely political. The Band set very specific conditions on which the surrendered lands were to be leased and the Crown did not respect them. If the Band had known the content of the lease between the Crown and the Shaughnessy Heights Golf Club, it would never have ceded the lands in the first place. The Crown also committed a tort of deceit by misrepresenting the conditions the lessee was willing to accept.
Crown: The litigious facts were not a cause for action. If a legally enforceable fiduciary duty existed, its requirements were those expressed in the surrender agreement, which allowed the Crown to lease the 162 acres to whomever it chose, for any purpose, and upon any conditions which the Crown judged most favourable to the Band’s interests. The surrender document did not create the duty to lease to the Shaughnessy Heights Golf Club on the conditions considered during the surrender meeting; nor did it compel the Crown to obtain the Band’s consent with respect to the terms of the lease ultimately entered into. Section 18 of the Indian Act imposes a fiduciary obligation of an administrative nature, since it is a political obligation and not one sanctioned in private law.
Federal Court (1982): A fiduciary duty was created by the surrender and its verbal conditions consisted of all the specifications agreed upon by the Band in negotiations with the Department of Indian Affairs prior to the actual surrender. The Crown breached its fiduciary obligation to the Band. The trial judge granted $10 million in damages.
Federal Court of Appeal (1983): J. Le Dain, later named to the Supreme Court, reversed the decision, deciding in favour of the Crown because the wording of s. 18 of the Indian Act does not clearly indicate an intention to create a true trust like those found in private law.
Laskin, Dickson, Beetz, Chouinard, Lamer, Estey, Wilson, Ritchie et McIntyre
The Court unanimously held that the remedy was justified by the equitable principles of fiduciary obligation, albeit for three different sets of reasons.
J. Wilson (JJ. Ritchie and McIntyre): A fiduciary obligation existed on the basis of a trust occurring “upon surrender” of the lands by an Indian band. Section 18 of the Act is more than an administrative directive; it is a legal recognition of the Crown’s historic responsibility to protect the Indians’ beneficial interest in their reserve. The Crown neglected its fiduciary obligations when it concluded a lease with the Shaughnessy Heights Golf Club without taking into account the conditions approved by the Band and by reaching an agreement less favourable to the Band. The concurring justices agreed that there was a fiduciary relationship analogous to a trust. By omitting to reveal to the Band the Shaughnessy Heights Golf Club’s refusal of its conditions, the Crown committed an act of deceit equivalent to fraud in equity.
C.J. Dickson for the majority (JJ. Beetz, Chouinard, Lamer): The Crown’s obligation was not an express or implied trust, as not all of the components of such a trust were present. The surrender cannot be interpreted as constituting a trust, seeing as the Crown was not enriched by the surrender. It was the conduct of the Crown that was reprehensible because it ignored the conditions approved by the Band even though it was bound to them.
J. Estey: The rationale for the decision was rooted in the law of agency, as the Band selected the Crown as its agent to fulfill its commercial interests. As a result, the Crown was not exempt from liability for its breach of that relationship.
In the Guerin decision, the Supreme Court acknowledged that an Aboriginal title creates a trust between the Crown and the band that holds it. It is rooted in common law and is a sui generis right of the descendants of the land occupants at the time of initial contact with the Europeans. It was only in 1982 that this fiduciary duty gained constitutional protection due to the enactment of s. 35 of the Constitution Act, 1982 (Hogg, 2008).
Canada’s highest court also limited the Crown’s jurisdiction over Aboriginal people and their lands by imposing an obligation to act in their best interest and to take their opinions into account (Aboriginal Justice Implementation Commission, 2001). In Aboriginal Legal Issues – Cases and Commentary, Burrows and Rotman wrote that the fiduciary theory can be used by the courts to compensate Aboriginal people who had been victims in the past of the “paternalistic acts of the government.” By drawing an analogy between this theory trust law in common law, the courts, in cases where politicians have failed, can use the remedies of private law and apply them to the case in question, making it an instrument of reconciliation and not one of oppression (Burrows and Rotman, 2003).
In 1984, 1985, 1986 and 1987, Canada’s first ministers held constitutional conferences regarding Aboriginal issues as required by s. 37.1 of the Constitution Act, 1982. The conferences contributed significantly to shaping the federal government’s public policy concerning Aboriginal title (Parlement du Canada, 2005).
Territorial negotiations in British Columbia
In 1989, the Premier’s Advisory Council of Aboriginal Affairs was created in British Columbia with the purpose of developing a new negotiation process for land claims between First Nations, the provincial government and the federal government. It was composed of three First Nations representatives, two representatives of the federal government, the Minister of Aboriginal Affairs and a member of the provincial legislature (Aboriginal Relations and Reconciliation, 2007). For two years, it held meetings with the province’s eleven tribal councils and nine Aboriginal organizations to gather their opinions on the negotiation process. In its final report, published in 1991, the Council commented on the fact that land claims are considered by members of First Nations as a crucial issue. The Council’s position was that both provincial and federal governments have every reason to settle land claims. By doing so, they would show respect towards Aboriginal people and would contribute to their economic and social development as well as encourage their autonomy (Canada, 1997).
In 1990, in the Sparrow case, the Musqueam Indians were once again before the Supreme Court on a question relating to an Aboriginal right to fish salmon. Since Sparrow was charged after 1982, he based his defense on s. 35 of the Constitution Act, 1982, which protects Aboriginal treaty rights. In a unanimous decision recognizing this particular right, C.J. Dickson and J. La Forest stated that the Crown’s fiduciary duty is a principle guiding every relationship between Aboriginal people and the federal government (Hogg, 2008). The Council of Aboriginal Affairs’ final report published in 1991 referred to this landmark decision. It commented on the Supreme Court’s activism on these issues by saying that land claims should be resolved by the government and not the courts. It recommended a revamping of federal government policies concerning land claims: it is necessary to address multiple claims simultaneously and to consent to claims made on traditional Aboriginal lands by groups that do not have the resources to establish their continuous use and occupancy of these lands (Canada, 1997).
Even if the Crown follows every directive given by the band in a transaction regarding a tract of surrendered land, it can still be held liable for breaching its fiduciary duty if the Court finds that the operation is not in the best interest of the members of the band, according to Blueberry (Blueberry River Indian Band v. Canada,  4 S.C.R. 344).
Commission de mise en œuvre des recommandations sur la justice autochtone. 2001. Rapport de l’Enquête publique sur l’administration de la justice et les peuples autochtones au Manitoba, Volume un : Le système de justice et les peuples autochtones. Online. http://www.ajic.mb. ca/volumel/chapter5.html#14. Accessed June 15, 2009.
Ministère des Relations et de la Réconciliation avec les AUTOCHTONES. 2007. B.C. Claims Task Force Report. Victoria : Province de Colombie-Britannique. Online. http://www.gov.bc.ca/arr/reports/bctf/ bc_claims_task_force_introduction.html. Accessed June 15, 2009.
Parlement du Canada. 2005. Constitution : Conférences constitutionnelles. Ottawa : Bibliothèque du Parlement. Online. http://www2.parl.gc.ca/Parlinfo/compilations/Constitution/Constitutional Conferences.aspx?Language=F. Accessed July 15, 2009.
Blueberry River Indian Band v. Canada (Department of Indian Affairs and Northern Development),  4 S.C.R. 344
Colombie-Britannique Conseil consultatif du premier ministre sur les affaires autochtones, 1991. Conseil consultatif du premier ministre sur les affaires autochtones : Rapport final. Victoria : Province de Colombie-Britannique.
Burrows John and Leonard Ian Rotman. 2003. Aboriginal Legal Issues – Cases and Commentary, 2nd ed. Markram: LexisNexis Butterworths.
Canada Commission royale sur les peuples autochtones. 1997. For Seven Generations: The Information Legacy of the Royal Commission on Aboriginal Peoples. Ottawa : Libraxus. CD-ROM.
Hogg Peter. 2008. Constitutional Law of Canada, Student Edition. Scarborough: Thompson Carswell.
R. v. Sparrow,  1 S.C.R. 1075