Last week, the Supreme Court of Canada issued its decision in Southwind v. Canada regarding the principles for calculating compensation for First Nations whose reserve lands have been taken without lawful authority.
The decision is a significant victory for First Nations across Canada seeking compensation for the illegal taking of their reserve lands. It builds on a growing body of recent cases which call on the federal and provincial governments to honour and uphold the Crown’s obligations to Indigenous peoples.
What it is about
In 1929, over 11,000 acres of Lac Seul First Nation’s reserve lands in Treaty #3 were flooded following the construction of a hydroelectric dam. Timber was lost, graves were damaged, gardens and fields were destroyed, and portions of the community were severed from one another. The lands remain flooded today.
Canada did not seek Lac Seul’s consent to surrender the lands prior to the flooding, nor did it take steps to expropriate the lands under the Indian Act.
Lac Seul filed a civil action against Canada in Federal Court. In 2017, the Federal Court found Canada breached its fiduciary duties to Lac Seul and that it had breached the Indian Act by failing to obtain a surrender from Lac Seul or take the necessary steps to expropriate the lands. The Court awarded Lac Seul equitable compensation in the amount of $30 million based on the fair market value of the lands at the time they were flooded.
Lac Seul appealed the Federal Court’s assessment of compensation. In 2019, the Federal Court of Appeal dismissed the appeal and upheld the decision of the lower court.
Lac Seul appealed to the Supreme Court asking it to clarify which principles apply when determining compensation for breaches of the Crown’s obligations to First Nations in respect of reserve lands.
What the Court said
The Supreme Court held that Canada breached its fiduciary obligations to Lac Seul First Nation when it allowed the flooding of Lac Seul’s reserves and that Lac Seul was entitled to compensation for the lost opportunity to negotiate a surrender of its reserve reflecting the highest value of the land.
The Court held that in the context of taking reserve lands for public works, Canada’s fiduciary obligations require it to attempt to negotiate a surrender before expropriating the lands, and ensure the First Nation receives compensation reflecting the nature of the interest, the impact of the taking and the value of the land in respect of the project in question.
Why it is important
Southwind clarifies the principles for the calculation of equitable compensation for breaches of the Crown’s fiduciary obligations in respect of the taking of reserve lands. The decision will have significant implications for both First Nations and the Crown in the resolution of claims involving the unlawful taking of reserve lands.
The decision confirms the Crown’s fiduciary obligations are heightened when it exercises control over reserve lands set aside in fulfillment of a treaty promise.
The decision also confirms traditional expropriation law principles are insufficient to assess compensation for the taking of reserve lands because Indigenous peoples’ interests in those lands -- and the Crown’s obligations to protect and preserve those interests -- are fundamentally different from the interests of a private landowner.
In the case of public works such as hydroelectric projects, it is not open to the Crown to simply expropriate the land. Instead, the Crown must attempt to negotiate a surrender of the lands on terms agreeable to the First Nation. Regardless of whether the lands are surrendered or expropriated, the Crown’s fiduciary obligations require it to ensure the highest compensation possible for the First Nation, including compensation for the land’s anticipated future use in connection with the project.
For decades, First Nations across the country have sought redress for Crown decisions which resulted in the loss of their reserves. The resolution of these claims is a critical component of reconciliation.
The Federal Court of Appeal’s decision in Southwind resulted in confusion and uncertainty regarding the proper approach to the calculation of equitable compensation for the unlawful taking of reserve lands. The decision of the Supreme Court provides much-needed guidance on the Crown’s fiduciary obligations and the corresponding approach to determining compensation.
The Southwind decision also forms part of a series of recent decisions which set out clear directions for how federal and provincial governments should fulfil their obligations to Indigenous peoples -- and the tangible consequences that will result if governments ignore their responsibilities.
At a time when public calls for reconciliation are growing across the country, and in light of numerous legal challenges based on the Crown’s failure to fulfil its obligations to First Nations, governments would be wise to heed the Court’s direction and take concrete action to both address past wrongs and honour and protect Indigenous peoples’ lands and rights now and into the future.
*First Peoples Law LLP was honoured to represent the Grand Council Treaty #3 in the Southwind appeal. The views expressed here are our own.
First Peoples Law LLP is a law firm dedicated to defending and advancing the rights of Indigenous Peoples. We work exclusively with Indigenous Peoples to defend their inherent and constitutionally protected title, rights and Treaty rights, uphold their Indigenous laws and governance and ensure economic prosperity for their current and future generations.
Kate Gunn is partner at First Peoples Law LLP. Kate completed her Master's of Law at the University of British Columbia. Her most recent academic essay, "Agreeing to Share: Treaty 3, History & the Courts," was published in the UBC Law Review.
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