Restoule v. Ontario and Canada: A Weak Court of Appeal Win Contains the Seeds of a Practical Loss (Part 1 of 2)

Commentary, Aboriginal Futures, Peter Best

Background

In 1850, the 21 Ontario Indian bands along the north shores of lakes Huron and Superior, by the terms of the Robinson Treaties, surrendered and ceded to the Crown all their claims to ownership of the treaties territories in exchange for monies paid and to be payable in the future, the establishment of reserves, and the retention of the right to hunt, fish, and gather on the surrendered and ceded lands.

There was a one-time, “signing bonus,” a cash payment of 2000 pounds to each of the Superior and Huron bands. In addition, the treaties promised the “further perpetual annuity” of 500 pounds to the Superior bands and the “further perpetual annuity” of 600 pounds to the Huron bands. The treaty said that “the same to be paid and delivered to the said Chiefs and their Tribes at a convenient season of each summer.” (The Huron bands perpetual annuity was greater because their population was larger.) These annuities are sometimes referred as the “collective lump sum annuities.”

The Treaties contained a provision called “the augmentation clause” whereby the collective lump sum annuities could, at the discretion of the Crown, be augmented, that is, increased. The relevant wording of the discretionary clause is:

…in case the territory hereby ceded …shall at any future period produce an amount which will enable the Government of this Province, without incurring loss, to increase the annuity hereby secured to them, then and in that case the same shall be augmented from time to time, provided that the amount paid to each individual shall not exceed the sum of one-pound Provincial currency in any one year, or such further sum as Her Majesty may be graciously pleased to order….

In 1875, the “one-pound Provincial currency” was increased to $4 per year, and it has remained at that level to the present day. 

For about 150 years following the signing of the treaties, all signatories demonstrated that their common intention was that there was to be paid every year one collective lump sum annuity to each of the Superior and Huron bands with each lump sum fixed at the stated amounts, (500 pounds and 600 pounds), with payment being direct individual payments of $4 to each treaty beneficiary. In the Crown’s sole discretion, the lump sum could be increased if economic conditions warranted. But the maximum increase would be “capped” at $4 per treaty beneficiary, or, as stated, increased tosuch further sum as Her Majesty may be graciously pleased to order.” Again, the capped amount would be paid in the form of direct, individual payments to all beneficiaries, even as the population increased.  

Significantly, it was agreed that the annuity could be proportionately reduced if the Indigenous populations fell below two-thirds of what they were in 1850, with only 1,240 persons in the Superior territory and 1,422 in the Huron territory.

During this approximately 150-year post-treaties period, all parties acted as though the treaties called for only one lump sum collective annuity by individual payments to all individual treaties beneficiaries at the maximum rate of $4 per year. 

Many Northern Ontarians are aware of the annual treaties payments ceremonies where a Crown agent showed up with a bag of toonies and distributed two toonies, (or sometimes a cheque for $4), to each beneficiary. At these ceremonies, no Chief demanded a second cheque in addition to his or her $4 payment. 

The one $4 direct payment to each individual beneficiary seemed to cover all that was legally owing. The post-treaties behavior showed that it was never the belief of the beneficiaries that the treaties called for two annual payments:  first, a payment to the “Chiefs and the Tribes” as a collective, and second, an individual payment to each treaty beneficiary. While on occasion there were requests that the annual $4 individual payment be increased, there was never any demand that there was to be a second payment to “the Chiefs and the Tribes.”

The Court Challenge

However, beginning in the early 2000’s, the legal, social, and political landscape began to change. First Nations began to consistently win Court cases. The “duty to consult and accommodate” was invented in their favour by the Supreme Court. Most of British Columbia and other areas of Canada were declared to be the subject of “aboriginal title” by the Supreme Court. The rights of the federal and provincial governments to be the sole maker of laws governing all Canadians were significantly diminished in favour of First Nations who have become a third level of sovereignty infringing on both provincial and federal areas.

The doctrine of “the honour of the Crown,” which has almost always governed our governments’ dealings with First Nations, has been pushed by the courts and political elites to such extremes that in Indigenous rights cases it is now considered “bad form,” and not promoting “reconciliation”, for the Crown to fully and strenuously defend non-Indigenous rights even when there are strong, principled, fiscal, and precedential reasons for doing so. Crown lawyers are now routinely instructed by their political masters to defend Indigenous claims with one-hand figuratively tied behind their backs. 

Even in the Restoule case, the trial judge expressed dismay at some of the objectively reasonable positions taken by saying that “the Province’s submissions present an impoverished vision of the Honour of the Crown and all that it implies,” which is only one example of a Court chastising a Crown litigant for fighting too hard in doing its legitimate job. In my opinion, this was an inappropriate chastisement that would discourage the Crown in similar cases from fully defending itself.

Treaties with Indian bands, which historically were regarded by both sides as one-time land surrender agreements, as evidenced by the first 150 years of post-treaties conduct on the part of the Superior and Huron bands, are now being re-imagined as perpetual land and revenue sharing agreements.

It is in this context, that the present-day Chiefs of the Superior and Huron bands opportunistically decided that the treaties had, in fact, promised an annuity that was payable in two parts:  the $4 annual individual payment that had been faithfully paid for 150 years, and a recently thought-up “Chief’s and Tribes” payment that allegedly was to have been paid for all those years. 

So, the Huron and Superior bands sued both Ontario and Canada for the recovery of those “missed” payments. At trial, they won their case. (Link to  1850 Treaties decision article for a full description of the case at trial and of the writer’s  deep concerns about it.)

The trial judge, Madame Justice Patricia Hennessey, ruled that the Crown ( a yet unknown mix of Ontario and Canada) has a mandatory obligation to increase the annuities when the economic circumstances warrant, and that, if the economic circumstances do warrant, must not only pay all the 150 to 175  years of missed payments, but must retroactively increase the amount of those missed payments, without limit, “so as to achieve the Treaty purpose of reflecting in the annuities a fair share of the resources, including the land and water in the territory.” 

She wrote: “The Crown is obligated to increase the promised lump sum annuity payment … if net Crown resource-based revenues from the Treaties territories permit it to do so without incurring loss.” (emphasis added)

In substance, the judge ruled that the treaties, which had always been treated as one-time land surrender agreements, were, in law, perpetual revenue sharing agreements.  Ontario and Canada now owed the bands compensation, perhaps billions of dollars, for failing to regularly pay “the Chiefs and the Tribes” additional monies representing their “fair share of the resources” of the territories going back to the 1850s.

She ordered that there be an accounting to determine the amount, if any, which both parties have named “The Stage Three Proceedings.” 

The trial judge included guidance for the Stage Three Proceedings on “net Crown resource-based revenues,” meaning, to her, Crown resource-based revenues less relevant expenses. Very significantly in her judgment the relevant expenses that would be considered in the upcoming proceedings would not include “the costs of infrastructure and institutions that are built with Crown tax revenues.” This is relevant in the discussion of the Court of Appeal decision, and in my opinion, the Court of Appeal’s handling of this phrase turns what seems to be a win for the Treaties bands into a potential loss.

The Court of Appeal Decision

Five judges on the Court of Appeal heard Ontario’s appeal of Justice Hennessey’s decision. Consistent with the Trudeau government’s harmful policy of not seriously contesting Indigenous lawsuits, (see The Trudeau Crown Sovereignty Surrender Directive), Canada did not appeal Justice Hennessey’s trial decision.

By a vote of 3-2 the Court of Appeal upheld Justice Hennessey’s interpretation of the treaties. Specifically, the Court ruled that the Crown does not have the unfettered discretion to leave the collective lump sum annuities and the $4 annual individual payments “as is.” The Appeal Court upheld the ruling that “the honour of the Crown” demands that the provincial and federal governments determine whether and how the payments should be increased, fully engage with the bands, and if the economic conditions warrant, determining if the increased payments can be made by the Crown without “incurring loss”, then the governments must make increased payments to “the Chiefs and their Tribes.”

The two appeal judges in the minority said that Justice Hennessey was wrong in her interpretation of the treaties. They used the words “unreasonable,” “distortion,” and “pure speculation” and they described her interpretation of the treaties as “strained and illogical.” They wrote:

“We conclude that the trial judge erred in finding that the … treaty annuities were a “collective entitlement” containing within them a separate ‘distributive amount” payable to individuals. That is, the trial judge erred when she expressly found that the collective entitlement was greater than the sum of the individual amounts that were distributed to members of the Robinson-Huron and Robinson-Superior Treaty First Nations.

Specifically, the trial judge concluded that the $4 per person “cap” applied only to the individual distributive amount and that there was no cap on the collective entitlement, which was to reflect a fair share of the value of the resources, including the land and water in the treaty territory.

In my respectful view, this conclusion was an error of law in her interpretation of the treaties. The only reasonable conclusion is that there was only one annuity under each treaty, which was to be, (and in fact was historically) distributed in its entirety to the individual members of the first nations. That annuity was subject to an aggregate “cap” of $4 person, but this was a “soft cap” and was subject to increases only through the exercise of “Her Majesty’s graciousness.”

 In ordinary parlance “Her Majesty’s graciousness” means  the Crown’s unfettered discretion.

Usually in important legal cases like this one, with a split decision at the Court of Appeal and an extremely strong minority dissent, the losing side appeals the case to the Supreme Court of Canada for a final ruling. This is what Ontario and Canada must do.

Peter Best has practiced law in Sudbury, Ontario for 46 years. He is the author of There Is No Difference, An Argument for the Abolition of the Indian Reserve System, which has been endorsed by retired Supreme Court of Canada Justice Jack Major. (Thereisnodifference.ca)

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