Aboriginal and Indigenous Law: Recent developments of importance

This article was provided by Olthuis Kleer Townshend LLP

This year, the Supreme Court of Canada released several important Aboriginal law decisions.[1]  In this year’s update, we focus on the implications of these decisions on the obligations arising from the honour of the Crown and remedies for its breach; the application of limitations to historical claims brought by Indigenous peoples; and the application of the Charter to self-governing First Nations and the role of s. 25 of the Charter in shielding some of their decisions from Charter scrutiny.

The Honour of the Crown

The honour of the Crown and contractual relationships

Over the past 20 years, the principle of the honour of the Crown has taken on an increasingly important role in the Supreme Court of Canada’s Aboriginal law jurisprudence.  The Supreme Court has said that the honour of the Crown is a “core precept”[2] that is engaged “in situations involving reconciliation of Aboriginal rights with Crown sovereignty”[3] which gives rise to different duties in different circumstances.[4]   While the Court has been clear that the honour of the Crown is not an independent cause of action,[5] it has treated the honour of the Crown as a bedrock principle from which a number of diverse obligations can arise, depending on the context – from  the duty to consult and accommodate, to fiduciary duties, to duties to generously interpret and diligently implement treaty promises and other solemn constitution promises.[6]

This year, in Quebec (Attorney General) v Pekuakamiulnuatsh Takuhikan, 2024 SCC 39, the Supreme Court of Canada expanded the scope of the Crown’s duties arising from the honour of the Crown into the realm of contract law. 

The case concerned a series of successive tripartite agreements between Canada, Quebec and Pekuakamiulnuatsh Takuhikan Innu First Nation in what is now Quebec. The tripartite agreements aimed to establish and fund an Indigenous police force, Sécurité publique de Mashteuiatsh (“SPM”).  

Under these agreements, Canada and Quebec made financial contributions capped at a maximum amount. Pekuakamiulnuatsh Takuhikan was responsible for administering and managing SPM, and any deficits the service  incurred.[7]  Between 2013 and 2017, the SPM had significant operating deficits close, which Pekuakamiulnuatsh Takuhikan had to cover.[8] In this period, Canada and Quebec knew that funding levels under the tripartite agreements were insufficient to meet the SPM’s operating costs, leading to systematic deficits, but they refused to negotiate higher levels of funding. Pekuakamiulnuatsh Takuhikan repeatedly agreed to renew the tripartite agreement and incur deficits to keep its police force operating rather than reverting to a non-Indigenous police service.[9] 

Pekuakamiulnuatsh Takuhikan brought a claim against Canada and Ontario.  By the time the case reached the Supreme Court, only Quebec remained a defendant, as Canada had paid their share of the accumulated deficit after the Court of Appeal decision. 

The Supreme Court held that Quebec had breached its obligations flowing from (1) the principle of good faith in private law, and (2) the honour of the Crown by refusing to renegotiate its financial contributions when the contracts were renewed, even though it was aware the SPM was underfunded and that a return to mainstream, non-Indigenous policing would harm the community.[10]

This decision establishes, for the first time, that certain contracts between the Crown and an Indigenous group will engage the honour of the Crown.  The Court said that a contract between the Crown and Indigenous group will engage the honour of the Crown if it is entered into  “by reason and on the basis of the group’s Indigenous difference”; and relates to a credibly asserted self-government right.[11]  

The Supreme Court found that the tripartite agreement in Pekuakamiulnuatsh Takuhikan satisfied these criteria. It was entered into by reason of Indigenous difference because it was meant to establish an Indigenous police force distinct from federal and provincial policing services. It also related to a credibly asserted self-government over matters of public safety.  The Court noted that an Agreement-in-Principle for a treaty that would provide for self-government had been signed between the parties.  That agreement would have recognized Pekuakamiulnuatsh’s law-making authority in this area. [12]

The Supreme Court also clarified the Crown’s duties when it enters a contract that engages the honour of the Crown: the Crown is required to interpret the contract generously[13]  and perform it with honour and integrity – a higher standard than in an ordinary private law contractual relationship, including than imposed by the duty of good faith.[14]  And, the Crown is required to negotiate contracts of this nature honourably. This means avoiding sharp-dealing – that is, not adopting an intransigent attitude or trying to impose an outcome but instead coming to the table with an open mind and the goal of engaging in genuine negotiations with a view to entering agreement as well as acting in a way that “maximizes the chance of success”.[15]

It is worth noting that the tripartite agreements at issue in Pekuakamiulnuatsh Takuhikan, included a renewal clause.[16]  So, on the facts of this case, the duty to negotiate honourably and avoid sharp dealing was function of the Crown’s duty to interpret the renewal clause generously and implement it honourably. However, the language in the decision is broad enough to suggest that this duty to negotiate honourably may arise whenever the Crown decides to negotiate a contract that would engage the honour of the Crown, even if there is no existing contract and no renewal provision that must be implemented.[17] 

Finally, the Court is clear that the Crown cannot contract out of its obligations pursuant to honour of the Crown through clever drafting.  Whether a given contract falls within the category of contracts that engage the honour of the Crown is a matter of legal categorization, not the intention of the parties.[18] 

This decision has wide-ranging implications. Provinces, territories and Canada regularly enter contracts with Indigenous governments that are designed to facilitate those Indigenous governments delivering culturally appropriate services to their people, often in a context where mainstream services have done harm.   These contracts often relate to and are entered into because of “indigenous difference”, in the sense that they seek to provide Indigenous peoples with culturally appropriate services more consonant with their “distinctive philosophies, traditions and cultural practices.”[19] In our view, because self-government is an inherent right that adheres to First Nations because they are peoples, most First Nations will be in a position to credibly assert it.  Arguably, most contracts that relate to funding First Nations to deliver their government services to their own people will connect to their credibly asserted rights of self-government. And so, a great number of these governance and services agreements arguably engage the honour of the Crown.  This significantly expands the potential scope of liability for Crown governments in their contractual relationships with Indigenous peoples.

Coercive Remedies and Reconciliatory Justice: Remedies for Breaches of the Honour of the Crown

This year, the Court also issued important direction on the remedies available for breaches of the honour of the Crown.  Until this year, it was an open question whether coercive or consequential remedies were possible for breaches of the duty to diligently implement treaty and other constitutional promises to indigenous peoples. 

In Restoule, the Supreme Court of Canada put this debate to rest and clarified that the “full range” of remedies are available when the Crown breaches this duty.  The Court was asked to interpret the annuities augmentation provision in the Robinson-Huron and Robinson-Superior Treaties, which promised Anishinaabe signatories that the Crown would increase their annuity if there were enough revenues from the Treaty territory to allow the Crown to do so without incurring loss.  The last increase of the annuity was in 1875.  It remained at $4 per person per year for nearly 150 years.

The Court found the annuities augmentation provisions required the Crown to consider, from time to time, whether it could increase the annuities without incurring loss. If it could, it was required to exercise its discretion whether to increase the annuity and if so, by how much.  The Court found the Crown had failed to diligently implement this provision, breaching both the treaties and its honour.[20]

One major issue before the Supreme Court was the appropriate remedy for this breach. Ontario argued that the only remedy for its broken treaty promise was a declaration. Ontario’s view was that substantive or coercive relief was not available because the honour of the Crown was not a cause of action in its own right, and ordering coercive relief would drive the parties into an adversarial relationship.[21]  After 150 years of the Crown breaching its treaty obligations and a long period of litigation in which it denied its breach, however, it is difficult to see how a remedy for that breach rather than the Crown’s conduct would be the cause of the relationship between treaty partners becoming adversarial.

The Supreme Court rejected Ontario’s argument and held that the “full range of remedies—declaratory and coercive” are available remedies for breaches of Treaty obligations or other duties arising from the honour of the Crown.[22]  The key question in determining remedies for breaches of the honour of the Crown is, what is required to restore the Crown’s honour and effect reconciliation? The Court was clear that crafting appropriate remedies that respond to this imperative may require creativity on the part of courts.[23]

In Quebec v Pekuakamiulnuatsh Takuhikan, the Court gave some further direction on remedies for breaches of the honour of the Crown. The Court noted that remedies for breaches of the Honour of the Crown in the context of contractual relations are aimed at what it called “reconciliatory justice”—that is, restoring the Crown’s honour and repairing the relationship between the Indigenous Nation and the Crown to put them back on the “path to reconciliation”.[24] The Supreme Court directed that courts must take the Indigenous claimant’s perspective into account in fashioning remedies that will achieve this goal.  It noted that, “the more reasonable the Indigenous perspective is, the greater the likelihood that the court will accede to it.[25] 

In addition, the Supreme Court took a robust approach to remedies from the Crown’s breach, upholding a damage award calculated to correspond to the accumulated deficits Pekuakamiulnuatsh Takuhikan had amassed as a result of Quebec’s underfunding, plus interest. The Court justified this remedy by referring to its forward-looking potential to repair of the relationship between Pekuakamiulnuatsh Takuhikan and the Crown and allow the SPM to find its footing.[26]

This idea of reconciliatory justice is a relatively new remedial theory.  It has the potential to encourage courts to fashion more creative remedies that are responsive to Indigenous perspectives of what is required to repair ruptures in their treaty relationships with the Crown. 

However, it also poses some risks. The Crown and First Nations will often have quite different ideas about what is required to repair breaches of the Crown’s honour and retore the treaty relationship, and what is “reasonable” in this context.  A Canadian court, steeped in the mainstream legal system, will likely need robust evidence to help them understand the perspective of Indigenous claimants on these points.

In addition, as  in Pekuakamiulnuatsh Takuhikan shows, repairing a relationship going forward may require, as a starting point, paying back what was lost due to the Crown’s dishonourable conduct. There is a danger that this focus on “repairing the relationship” going forward will minimize the relevance of ensuring Indigenous groups recover what they lost as a result of the Crown’s dishonourable conduct, when in many cases, this is central to “repairing the relationship”.

The Application of Limitations Statutes and Continued Role of Declaratory Relief

This year, the Supreme Court issued two decisions that dealt with the application of limitations statutes to claims for historical breaches of treaty rights.

In Restoule, the Supreme Court rejected Ontario’s arguments that the claims for breach of treaty were statute barred. The current Limitations Act, 2002 SO 2002 c 24 Sch B, provides that “proceedings based on existing Aboriginal and treaty rights  recognized and affirmed by s. 35 of the Constitution Act, 1982 and equitable claims by Aboriginal peoples against the Crown are governed by “the law that would have been in force with respect to limitation of actions if this Act had not been passed” (ss. 2(1)(e), 2(1)(f) and 2(2))”.  The parties agreed that, due to this provision, if any limitations law governed, it was the 1990 Limitations Act , R.S.O. 1990, c. L.15.   Ontario attempted to rely on limitations periods for actions on the case and actions for account in the 1990 Limitations Act, which the Court decisively rejected.[27] This decision suggests that there is no limitation period for breach of treaty in Ontario.   

In Shot Both Sides, the Supreme Court was asked to consider whether the Blood Tribe’s breach of treaty claim, which was filed in 1980, was barred by the 6-year basket limitation period in the Alberta Limitation of Actions Act, RSA 1980, c. L-15. The trial judge had previously found as fact that the underlying treaty claim was discoverable in 1981, and so the claim was limitations barred.[28]

This question rested on whether a breach of treaty claim was enforceable and actionable prior to the coming into force of s. 35(1). The Blood Tribe argued that the treaty claim could not be statute-barred before it was recognized action in law, and claims for breach of treaty were not actionable before 1982, when s. 35(1) came into force.[29]

The Supreme Court rejected this argument. The Court held treaties were enforceable from the date of execution and not just in 1982 when s. 35(1) came into force.[30] The effect of s. 35(1) was instead to constitutionally “entrench” the Crown’s obligation to respect existing Aboriginal and treaty rights.[31] This had the practical effect of constitutionalizing existing enforceable rights so that they could no longer be abrogated by legislation.[32]

Given this analysis, the Supreme Court held that much of the Blood Tribe’s claim was barred by Alberta’s Limitations of Actions Act.[33]

It is worth noting that the Blood Tribe did not challenge the constitutional applicability of provincial limitations act to breach of treaty claims,[34] and the Court did not address it, though the issue was raised by several interveners.[35]  This remains to be resolved in future cases.

In addition, the Court explained that the law of limitations does not stop the court from issuing a declaration about the constitutionality of the Crown’s conduct and breaches of the Crown’s treaty obligations.[36] While a declaration does not provide the Blood Tribe with the damages they were seeking, the Supreme Court expressed confidence that a declaration explaining that the Crown has breached its treaty obligations can promote reconciliation and encourage efforts by the parties to address the breach of the treaty the negotiating table.[37]

Shot Both Sides continues a trend of using declarations to encourage dialogue and resolution of Indigenous claims. As in Restoule and Pekuakamiulnuatsh Takuhikan, in Shot Both Sides, the Court expressed a great deal of optimism that declarations will drive the parties to the negotiating table so that the Crown can repair its relationships with Indigenous peoples. 

 There are both risks and advantages to this approach. There is a practical benefit to the resolution of treaty disputes by clarifying the parties’ initial legal positions, which can support them in negotiating a fair resolution of these claims.

At the same time, however, court proceedings, particularly those that deal with historical breaches of the Crown’s duties, are expensive, difficult and time-consuming.  Most Indigenous peoples who bring these claims and litigate them to the end have tried to deal with the Crown at the negotiating table and have faced Crown governments that are unwilling to address the harms they have caused. The risk of the Court’s approach in Shot Both Sides is that Crown governments will take the position that, because a court ordered declaratory rather than consequential remedies, it owes no further consequential relief to First Nations at the negotiating table.

As noted above, the courts have buttressed against this risk by enhancing the remedies and duties associated with the honour of the Crown, including the duty to negotiate.[38] By taking steps to ensure the Crown has to come to the table with Indigenous peoples, and avoid taking an intransigent or “sharp elbows” approach to negotiations, the courts have given some insurance to Indigenous peoples against the risk the Crown will not be willing to negotiate further consequential remedies after the Court a declaration it has breached its duties.

The Application of the Charter to First Nations’ Governments and the scope of s. 25 as a “shield”

Finally, in Dickson v. Vuntut Gwitchin First Nation, the Supreme Court addressed two novel and important issues about how the Charter will apply to self-governing First Nations.  At issue in Dickson was the requirement, set out in the Vuntut Gwitchin Constitution, that elected representatives of the Vuntut Gwitchin must reside in or relocate to the First Nation’s settlement lands.  Ms. Dickson, a member of the Vuntut Gwitchin who lived outside the settlement area due to her son’s medical condition, challenged that provision as a violation of s. 15 of the Charter.

The first issue in the case was whether the Charter applies to the Vuntut Gwitchin constitution at all. [39]   Section 32(1) of the Charter states that:

This Charter applies

(a) to the Parliament and government of Canada in respect of all matters within the authority of Parliament including all matters relating to the Yukon Territory and Northwest Territories; and

(b) to the legislature and government of each province in respect of all matters within the authority of the legislature of each province.

Although the wording of the provision would seem to suggest that the Charter applies only to the federal and provincial governments, the majority of the Court concluded this provision could be read to sweep in the Vuntut Gwitchin government. They came to this conclusion because they thought the Vuntut Gwitchin government was a “Government” by nature, as indicated by the fact that it: (1) is democratically elected; (2) has general taxation power similar to Parliament; (3) is empowered to make and enforce coercive laws; and (4) is a legal entity under federal implementation legislation and therefore derives at least some lawmaking authority from the federal government.[40]

Justice Rowe wrote a powerful dissent on this point. He explained that the implication that a First Nation’s authority flows from Parliament is fundamentally inconsistent with the nature and purpose of Indigenous self-government, [41] which instead flows from “Indigenous peoples exercising authority that is rightfully theirs”.[42] He observed that the fact that the Vuntut Gwitchin government is a government does not automatically lead to the conclusion that the Charter applies.[43]

The second issue in the case is whether s. 25 of the Charter “shielded” the residency requirement from challenge under s. 15 of the Charter,[44] or acts merely as an “interpretive aid” for other provisions.  Before Dickson, the leading opinion on the issue was Bastarache J.’s concurrence in R v Kapp, 2008 SCC 41. In Justice Bastarache’s view, s. 25 operated as a shield to protect Indigenous rights from the application of the Charter where the Charter would diminish the distinctive, cultural, and collective identity of an Indigenous Nation. [45]  He rejected the argument that s. 25 operates only as an interpretive aid.[46]

In Dickson, the majority of the Supreme Court adopted a similar approach. It held that the provision operates to shield Aboriginal, treaty and other rights over individual Charter rights, but only where those “other” rights protect “Indigenous difference”.[47] It also held that the  protections offered by s. 25 operate only where there is an “irreconcilable conflict” between Aboriginal, treaty or “other rights” s. 25 protects and the claimed Charter right.[48]

The majority adopted a four-step framework to the s. 25 analysis:[49]

1. The Charter claimant must show that the impugned First Nation law or conduct prima facie breaches an individual Charter right.
2. The First Nation must demonstrate that the impugned First Nation law or conduct is a right protected under s. 25.
3. The First Nation must demonstrate an irreconcilable conflict between the Charter and s. 25 right.
4. Courts must consider whether there are any applicable limits to the s. 25 rights. For example, s. 28 of the Charter will ensure that a right protected by s. 25 does not shelter gender-based discrimination.[50]

The new test adopted by the majority raises some new questions for Aboriginal and Indigenous law. The term “Indigenous difference” is new to the Aboriginal rights jurisprudence, and its scope will need to be worked out in subsequent decisions. The majority explained that “Indigenous difference” are those interests connected to Indigenous cultures, prior occupancy and prior sovereignty.[51] This leaves open just how broadly “other” s. 25 rights will be construed.