A-447-81
Morris Kruger, Emory Gabriel, Joseph Pierre and
Louise Eneas (Appellants) (Plaintiffs)
v.
The Queen (Respondent) (Defendant)
Court of Appeal, Heald, Urie and Stone JJ.-
Vancouver, November 26 and 27, 1984; Ottawa,
March 18, 1985.
Indians - Reserve lands expropriated for airport
Expropriation allegedly precluding Indians from exercising
right to refuse to sell or to lease on appropriate terms
Expropriation valid under Act, s. 48 - No surrender required
- Fiduciary duty of Crown - Appeal dismissed as claim
statute barred - Indian Act, R.S.C. 1927, c. 98, ss. 19, 48, 50.
Crown - Expropriation by Department of Transport of
Indian reserve lands for airport - Fiduciary duty - In-depth
discussion of Guerin et al. v. The Queen et al., [1984] 2 S.C.R.
335 - Conflict of interest - Crown's duty to Indians vs.
Crown's duty to Canadian public - Appeal dismissed.
Limitation of actions - Expropriation by Crown of Indian
lands - Causes of action arising in 1941 and 1946 - Action
instituted in 1979 - Appellants' damages claim statute
barred under provincial legislation - No limitation period
under s. 83 Trustee Act where claim (1) based on fraud or (2)
to recover trust property - Claim not within either category
- Appeal dismissed - Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 38 - Limitation Act, R.S.B.C. 1979, c. 236,
ss. 3(3),(4), 6, 8(1), 9(1), 14(3) - Statute of Limitations,
R.S.B.C. 1936, c. 159, s. 38 - Trustee Act, R.S.B.C. 1936, c.
292, s. 83.
Expropriation - Indian reserve lands - No surrender
before compulsory taking - Whether s. 48 Indian Act of 1927
authorizing expropriation - S. 48 providing for expropriation
procedures by federal Crown and by other specified bodies
exercising statutory powers of compulsory taking - Aliena
tion resulting from expropriation precluded from requirements
of surrender or release by virtue of opening words of s. 50 -
Indian Act, R.S.C. 1927, c. 98, ss. 19, 48, 50 - Indian Act,
R.S.C. 1952, c. 149, s. 18(1) - Expropriation Act, R.S.C.
1927, c. 64, s. 2(g) - The Railway Act, 1868, 31 Vict., c. 68, s.
37 - The Consolidated Railway Act, 1879, 42 Vict., c. 9, s. 37
- The Indian Act, 1880, 43 Vict., c. 28, ss. 31, 36, 37 - The
Indian Act, R.S.C. 1886, c. 43, ss. 35, 38, 39 - The Indian
Act, R.S.C. 1906, c. 81, s. 46 (rep. and sub. 1-2 Geo. V, c. 14,
s. 1).
The facts of this case have been summarized in the Editor's
Note infra. The issues are whether section 48 of the Indian Act
of 1927 entitles the Crown to expropriate reserve lands; in the
affirmative, whether such jurisdiction was properly exercised;
and whether there was a breach of the Crown's fiduciary duty.
No appeal was taken by either of the parties from the Trial
Judge's finding that the Crown stood as a fiduciary vis-Ã -vis
the appellants.
Section 48 of the 1927 Indian Act provides that no portion of
any reserve shall be taken for the purpose of any public work
without the consent of the Governor in Council "but any
company or municipal or local authority having statutory
power ... for taking ... lands ... without the consent of the
owner may, with the consent of the Governor in Council as
aforesaid ... exercise such ... power". Section 50 prescribes
that "Except as in this Part otherwise provided, no reserve or
portion of a reserve shall be sold, alienated or leased until it has
been released or surrendered to the Crown".
Held, the appeal should be dismissed.
Per Heald J.: The fiduciary obligation and duty discussed in
the Supreme Court decision in Guerin et al. v. The Queen et
al., [1984] 2 S.C.R. 335 is applicable to the instant case,
despite the factual differences between the two cases and the
difference in the statutory language. What was said by Dickson
J. (as he then was) in Guerin with respect to the fiduciary
relationship was not seen as authority for the general proposi
tion that such a relationship exists only where there is a
surrender of Indian lands to the Crown. According to Dickson
J. "the standard of conduct which the obligation imports is
both more general and more exacting than the terms of any
particular surrender". As was said by Mr. Justice Dickson in
Guerin in characterizing Indian title: "Their interest ... is a
pre-existing legal right not created by Royal Proclamation, by
s. 18(1) of the Indian Act, or by any other executive order or
legislative provision". On the facts of the present case, the
fiduciary duty was a continuing one arising as a consequence of
the proposal to take the lands and continuing throughout the
dealings with respect to the compensation payable for Parcels
A and B.
Bearing in mind that the Crown owes a fiduciary duty to the
Indians, the facts of the case clearly raise the issue of conflict
of interest. It is evident that two Departments of the Govern
ment of Canada were in conflict concerning the manner in
which the Indian occupants of Parcel A should be dealt with.
The evidence unquestionably established that the officials of
the Indian Affairs Branch were diligent in their efforts to
represent the best interest of the Indian occupants. On the
other hand, the Department of Transport was anxious to
acquire the additional lands in the interests of air transport.
The law is clear that "one who undertakes a task on behalf of
another must act exclusively for the benefit of the other". It is
also clear that the onus is on the trustee or fiduciary to
establish that the beneficiary was in possession of all the
relevant information known to the trustee. Based on those
principles, it is impossible to conclude that the federal Crown
acted "exclusively for the benefit" of the Indians. The recom
mendation by the Indian Affairs officials, that the ten-year
lease initially agreed to by the Indians be accepted, was ignored
on the ground that the amount of rental asked by the Indians
was unreasonable. The Department of Transport produced no
evidence that the rental demanded was unreasonable. Nor were
any appraisals produced in support of the final settlement of
$115 per acre which deprived the Indians of their total interest
in the lands. There was evidence that comparable property had
been sold several years earlier at prices of $200 to $300 per
acre. It can clearly be inferred from the record that in the final
decision-making process by the Governor in Council the views
of the Department of Transport prevailed over the views and
representations of the Department of Indian Affairs. Whatever
good and sufficient reason the former had to require the lands
does not relieve the federal Crown of its fiduciary duty to the
Indians.
The conflict of interest apparent in the dealings with respect
to Parcel A is equally apparent with respect to the acquisition
of Parcel B. An indication of the lack of concern for the
Indian's welfare on the part of the Departments of National
Defence and Transport is shown by the initial valuation of the
lands, i.e. $55 per acre; by the fact that they had possession for
some 18 months without paying the Indians anything on
account of compensation; by their rather leisurely approach to
negotiations for compensation as compared to their great haste
in taking possession and depriving the Indians of their means of
livelihood. The Crown cannot be said to have acted exclusively
for the benefit of the Indians. Moreover, the Crown failed to
fully disclose to the Indians all the relevant facts. The non-dis
closure of the opinion of the Deputy Minister of Justice was
considered as indicative of the attitude of the Crown's servants
outside the Indian Affairs Branch. Had there been evidence in
the record to indicate that careful consideration and due weight
had been given to the pleas and representations by Indian
Affairs on behalf of the Indians and an offer of settlement
reflecting those representations been made, the matter would
have been viewed differently.
With respect to the limitation of action issue, unlike the
Guerin case, the causes of action could have been discovered
had the appellants exercised reasonable diligence at the time
the causes of action arose. It follows that the limitation period
provided for in section 38 of the British Columbia Statute of
Limitations in force when the causes of action arose (in the
case of Parcel A, January 1941 and in the case of Parcel B,
February 1946) would have expired long before this action was
commenced in 1979.
However, by virtue of section 83 of the Trustee Act of British
Columbia, there is no limitation period for actions by benefici
aries against trustees where the claim (1) is based upon any
fraud or fraudulent breach of trust or (2) is to recover trust
property. The appellants cannot bring themselves within the
first category, having abandoned reliance on all pleadings
alleging fraudulent conduct. With respect to the second catego
ry, the question was considered in McLellan v. Milne & Magee,
[1937] 3 D.L.R. 659 (Ont. S.C.) where it was held in relation
to a limitation section of the Ontario Act containing almost
identical language to section 83, that an action requiring a
solicitor to make compensation to his client for a breach of his
duty arising out of a fiduciary relationship was not an action to
recover trust property. Such a claim was very similar to the
appellants' alternative claim for compensation. The McLellan
decision was applicable to the present case.
Furthermore, having regard to the transitional provisions of
the Limitation Act of British Columbia of 1975 which was in
force in 1979 when the action was commenced, the appellants'
claim is statute barred in any event. If subsection 14(3) of the
1975 Act applied, the limitation period would have expired on
July 1, 1977, almost two years prior to this claim being filed.
Sections 8 and 9 thereof also operate to bar the present action.
Per Urie J.: The issue whether section 48 of the Indian Act of
1927 confers jurisdiction on the Crown to expropriate reserve
lands is answered in the affirmative. Subsection 48(1) contem
plates two separate expropriation procedures, one where the
federal Crown is expropriating, and the second where specific
bodies other than the Crown exercise their statutory power of
compulsory taking. This is evidenced by the use of the word
"but" in subsection 48(1). By introducing that word in 1911,
Parliament intended to distinguish the position of those speci
fied corporations or authorities from that of the Crown by
importing the procedures for expropriation applicable to them
by their constituent statutes, into the Indian Act and by
enabling terms and conditions to be imposed by the Governor in
Council in giving his authority to such bodies to expropriate
reserve lands. Since the only body having the power of compul
sory taking other than a company, municipal or local authority
having such power to expropriate conferred on it by either the
Dominion or provincial Crown, was the Crown in right of
Canada, the portion of the subsection 48(1) preceding the word
"but" must therefore relate to the federal Crown.
Furthermore, section 50 does not require in all cases in which
the Crown is to be the transferee of Indian reserve lands that a
release or surrender to the Crown be obtained from the Indians.
Section 50 clearly applies to cases where reserve lands are to be
"sold, alienated or leased". The word "alienated" does not
encompass an expropriation of reserve lands by the Crown as
argued by the appellants. In its context, the word is neither
used in its technical sense nor does it apply to the facts of this
case. In any event, the opening words of section 50 "Except as
in this Part otherwise provided" preclude an alienation result
ing from an expropriation under section 48 from requirements
of release or surrender.
The second issue is whether the power to expropriate was
properly exercised. The appellants based the Court's jurisdic
tion to review the expropriation on the respondent's failure to
meet the "predominant purpose" test enunciated in Warne v.
The Province of Nova Scotia, Akerley, Jamerson, Henry and
Kinsman (1970), 1 N.S.R. (2d) 150 (N.S.S.C.). According to
that test, where the predominant purpose of the expropriation is
in furtherance of a tortious conspiracy to injure the owner of
the land taken, then the expropriation is subject to review by
the Court. In the case at bar, there is no evidence to support the
appellants' contention that the Departmental officials deliber
ately acquired the Indian lands in preference to those of
non-Indians because they could be acquired at lower prices.
With respect to the breach of fiduciary duty by the Crown, it
was assumed, without being determined, that the rules applying
to conflicts of interest between trustees and cestuis que trust
were equally applicable to fiduciaries. On the basis of that
assumption, it was found that there was no breach of the
fiduciary obligation of the Crown based on an alleged conflict
of interest between two of the Crown's Departments—Mines
and Resources, Indian Affairs Branch, and Transport. The
documentary evidence indicates that the Indian Affairs officials
were forceful spokesmen for the Indians. The Transport offi
cials, on the other hand, owed a duty to the people of Canada
as a whole, including the Indians, not to "improvidently expend
their moneys". The fact that the ultimate decision may not
have been entirely satisfactory to the Indians does not mean
that there was a breach of the fiduciary duty nor that there was
a conflict of interest which had to be resolved in their favour.
The Crown's competing obligations precluded it from either
acceding in full to the Band's demands or withdrawing from the
transactions entirely. The Crown was obliged to ensure that the
best interests of all for whom its officials had responsibility
were protected. The Governor in Council became the final
arbiter. The appellants chose not to resort to the Exchequer
Court but accepted the Crown's offers. It was difficult to see
how they could successfully attack, after several years, the
settlements to which they had agreed.
The appellants further contend that the respondent did not
exercise the degree of care expected of a fiduciary when it
failed to consider the "peculiar value and importance" to the
Indians of Parcels A and B. The record clearly shows that
officials at all levels were well aware of their respective obliga
tions and discharged them to the best of their abilities.
Finally, the appellants allege failure by the Indian Affairs
officials to disclose to the Band the opinion of the Deputy
Minister of Justice that Parcel B could not be expropriated.
The best evidence available in the absence of viva voce evi
dence, was a report prepared by the Indian Agent. It was found
that there had been no withholding of information. In any
event, since the expropriation was valid, the surrender was
superfluous.
With respect to the limitation of action issue, the appellants,
relying on Guerin, argued that the breach of duty arising from
the failure to disclose the opinion of the Deputy Minister of
Justice constituted an equitable fraud. This allegation was
rejected. The record disclosed several instances of the complete
candour of the Indian Affairs officials with the Indians
throughout the years.
CASES JUDICIALLY CONSIDERED
APPLIED:
Guerin et al. v. The Queen et al., [1984] 2 S.C.R. 335;
McLellan v. Milne & Magee, [1937] 3 D.L.R. 659 (Ont.
S.C.); Point v. Dibblee Construction Co. Ltd., et al.,
[1934] O.R. 142 (H.C.).
REFERRED TO:
Meek v. Parsons et al. (1900), 31 O.R. 529 (Div. Ct.);
Masters v. Madison County Mutual Ins. Co. (1852), 11
Barb. 624 (N.Y. App. Div.); Warne v. The Province of
Nova Scotia, Akerley, Jamerson, Henry and Kinsman
(1970), 1 N.S.R. (2d) 150 (N.S.S.C.); Kitchen v. Royal
Air Force Association, [1958] 1 W.L.R. 563 (C.A.);
Buttle v. Saunders, [1950] 2 All E.R. 193 (Ch. D.);
Calder et al. v. Attorney-General of British Columbia,
[1973] S.C.R. 313; City of Edmonton v. Hawrelak and
Sun-Alta Builders Ltd. et al., [1972] 2 W.W.R. 561,
affirmed [1973] 1 W.W.R. 79 (Alta. S.C.).
COUNSEL:
W. J. Worrall and K. S. Campbell for appel
lants (plaintiffs).
W. B. Scarth, Q.C. and T. B. Marsh for
respondent (defendant).
SOLICITORS:
Worrall, Scott & Page, Vancouver, for appel
lants (plaintiffs).
Deputy Attorney General of Canada for
respondent (defendant).
EDITOR'S NOTE
The three judgments herein total 104 pages of
manuscript. The Editor has decided to report this
case in an abridged format. Abridgments of the
following portions of the reasons for judgment
have been prepared: the facts as set out by Urie
J.; the review by Urie J. of the evidence as to
awareness of the Indian Affairs officials of the
"peculiar value and importance" of Parcels A and
B to the Indians; the reasons for judgment of
Stone J.; the review of the evidence with respect
to the acquisition of Parcels A and B in the
reasons for judgment of Heald J.
The following are the reasons for judgment
rendered in English by
HEALD J.: I have had the advantage of reading
the draft reasons for judgment prepared by my
brother, Urie J. I agree with him that section 48 of
the Indian Act, R.S.C. 1927, c. 98, enables the
respondent to expropriate lands from an Indian
reserve. I also agree that section 50 of the Act
which imposes a requirement for a release or
surrender to the Crown in respect of portions
"sold, alienated or leased" does not apply to expro
priations under section 48 because of the opening
words of section 50 which read: "Except as in this
Part otherwise provided". Because sections 48 and
50 are both found in Part I of the Act, it is clear,
in my view, that the requirements of section 50 do
not here apply. Were it not so, I would have had
difficulty in concluding that the word "alienated"
as used in section 50 would not encompass an
expropriation of reserve lands by the Crown. How
ever, for the reasons expressed infra, it is unneces
sary to finally decide that matter.
One of the central issues in this appeal, as I see
it, is the nature of the fiduciary duty owed by the
respondent Crown to the appellants and whether
the facts in this case demonstrate a breach of that
fiduciary duty.
As noted by Mr. Justice Urie, the learned Trial
Judge [(1981), 125 D.L.R. (3d) 513 (F.C.T.D.)]
held that the Crown stood as a fiduciary vis-Ã -vis
the appellants and no appeal was taken from this
finding by either of the parties. Given the existence
of such a duty, it is necessary to consider the
nature and the parameters of that duty. I agree
with my brother, Urie J. that the recent decision
(November 1, 1984) of the Supreme Court of
Canada in the Guerin case [Guerin et al. v. The
Queen et al., [1984] 2 S.C.R. 335] is highly
relevant and requires careful consideration. The
headnote summarizes the reasons of Dickson J. (as
he then was), speaking for himself, and Beetz,
Chouinard and Lamer JJ. as follows [at pages
336-337]:
The Indians' interest in their land is a pre-existing legal right
not created by the Royal Proclamation of 1763, by s. 18(1) of
the Indian Act, or by any other executive order or legislative
provision. The nature of the Indians' interest is best character
ized by its inalienability, coupled with the fact that the Crown
is under an obligation to deal with the land on the Indians'
behalf when the interest is surrendered.
The nature of Indian title and the framework of the statutory
scheme established for disposing of Indian land place upon the
Crown an equitable obligation, enforceable by the courts, to
deal with the land for the benefit of the Indians. Successive
federal statutes including the present Indian Act provide for the
general inalienability of Indian reserve land, except upon sur
render to the Crown. The purpose of the surrender requirement
is to interpose the Crown between the Indians and prospective
purchasers or lessees of their land so as to prevent the Indians
from being exploited. Through the confirmation in s. 18(1) of
the Indian Act of the Crown's historic responsibility to protect
the interests of the Indians in transactions with third parties,
Parliament has conferred upon the Crown a discretion to decide
for itself where the Indians' best interests lie. Where by statute,
by agreement or perhaps by unilateral undertaking, one party
has an obligation to act for the benefit of another, and that
obligation carries with it a discretionary power, the party thus
empowered becomes a fiduciary. Equity will then supervise the
relationship by holding him to the fiduciary's strict standard of
conduct.
Section 18(1) of the Indian Act confers upon the Crown a
broad discretion in dealing with the surrendered land. In the
present case, the document of surrender confirms this discretion
in the clause conveying the land to the Crown. When, as here,
an Indian Band surrenders its interest to the Crown, a fiduciary
obligation takes hold to regulate the manner in which the
Crown exercises its discretion in dealing with the land on the
Indians' behalf. The Crown's agents promised the Band to lease
the land in question on certain specified terms and then, after
surrender, obtained a lease on different terms which was much
less valuable. The Crown was not empowered by the surrender
document to ignore the oral terms which the Band understood
would be embodied in the lease. After the Crown's agents had
induced the Band to surrender its land on the understanding
that the land would be leased on certain terms, it would be
unconscionable to permit the Crown simply to ignore these
terms. Equity will not countenance unconscionable behaviour in
a fiduciary whose duty is that of utmost loyalty to his principal.
In obtaining without consultation a much less valuable lease
than that promised, the Crown breached the fiduciary obliga
tion it owed to the Band and it must make good the loss
suffered in consequence.
There are some factual differences between
Guerin and the case at bar which should be men
tioned. In Guerin, the Band had surrendered
reserve lands to the Crown for lease to a golf club.
The terms of the lease signed by the Crown were
much less favourable than those approved by the
Band at the surrender meeting. In the case at bar,
the lands referred to in these proceedings as Parcel
A, containing some 154.3 acres was expropriated
by the Crown. No surrender was obtained from
the Indians prior to that expropriation or at all.
The lands referred to in these proceedings as
Parcel B containing an additional 120 acres was
also expropriated by the Crown at a later date. A
surrender was obtained from the Indians with
respect to a Parcel B after the expropriation. Addi
tionally, there are some differences between sub
section 18(1) of the Indian Act, R.S.C. 1952,
which was applicable in Guerin and section 19 of
the Indian Act, R.S.C. 1927, which is the relevant
legislation in so far as the case at bar is concerned.
Subsection 18(1) of the Indian Act, R.S.C. 1952,
c. 149 as amended, reads:
18. (1) Subject to the provisions of this Act, reserves shall be
held by Her Majesty for the use and benefit of the respective
bands for which they were set apart; and subject to this Act and
to the terms of any treaty or surrender, the Governor in
Council may determine whether any purpose for which lands in
a reserve are used or are to be used is for the use and benefit of
the band.
Section 19 of the Indian Act, R.S.C. 1927, c. 98,
reads:
19. All reserves for Indians, or for any band of Indians, or
held in trust for their benefit, shall be deemed to be reserved
and held for the same purposes as they were held heretofore,
but shall be subject to the provisions of this Part.
It will be observed that the terms of section 18
of the 1952 Act are more specific than section 19
of the 1927 Act. However, I think such a differ
ence cannot effect the applicability of what was
said in Guerin to the instant case. I agree with the
statement of Hall J. in the case of Calder et al. v.
Attorney-General of British Columbia, [1973]
S.C.R. 313, at page 390, where he said that:
"aboriginal Indian title does not depend on treaty,
executive order or legislative enactment". This
view is confirmed by Mr. Justice Dickson in
Guerin at page 379 of his reasons where, in cha
racterizing Indian title, he said: "Their interest in
their lands is a pre-existing legal right not created
by Royal Proclamation, by s. 18(1) of the Indian
Act, or by any other executive order or legislative
provision." Accordingly, I conclude that the differ
ence in the statutory language applicable to
Guerin and to the case at bar does not impair in
any way the applicability, of the reasons and deci
sion in Guerin to the instant case.
Likewise, I am of the view that the factual
differences in the two cases do not detract from
the persuasive value of the Guerin reasons when
applied to the case at bar. In the case at bar, there
were two expropriations. In one expropriation
there was no surrender. In the other, the expro
priation was followed by the execution of a surren
der. I do not think, however, that what was said by
Mr. Justice Dickson relative to the fiduciary rela
tionship existing between the Crown and the Indi-
ans can be construed in such a way as to be
authority for the proposition generally that the
fiduciary relationship arises only where there is a
surrender of Indian lands to the Crown. It is
correct to note, as did Mr. Justice Urie, that those
comments were made by the learned Justice in the
context of the facts of that case which involved a
surrender of Indian lands to the Crown upon cer
tain terms. However, Mr. Justice Dickson made
the following comments at page 389:
While the existence of the fiduciary obligation which the
Crown owes to the Indians is dependent on the nature of the
surrender process, the standard of conduct which the obligation
imports is both more general and more exacting than the terms
of any particular surrender. In the present case the relevant
aspect of the required standard of conduct is defined by a
principle analogous to that which underlies the doctrine of
promissory or equitable estoppel. The Crown cannot promise
the Band that it will obtain a lease of the latter's land on
certain stated terms, thereby inducing the Band to alter its
legal position by surrendering the land, and then simply ignore
that promise to the Bands detriment. See. e.g. Central London
Property Trust Ltd. v. High Trees House Ltd., [1947] K.B.
130; Robertson v. Minister of Pensions, [1949] 1 K.B. 227
(C A.)
In obtaining without consultation a much less valuable lease
than that promised, the Crown breached the fiduciary obliga
tion it owed the Band. It must make good the loss suffered in
consequence.
Accordingly, I think it clear that the fiduciary
obligation and duty being discussed in Guerin
would also apply to a case such as this as well and
that on the facts in this case, such a fiduciary
obligation and duty was a continuing one—that is,
it arose as a consequence of the proposal to take
Indian lands and continued throughout the
negotiations leading to the expropriations and
thereafter including the dealings between the
Crown and the Indians with respect to the pay
ment of the compensation to the Indians in respect
of Parcels A and B.
What then are the parameters of this fiduciary
relationship? Bearing in mind that equity will
supervise the relationship by holding a fiduciary to
the fiduciary's strict standard of conduct and "will
not countenance unconscionable behaviour in a
fiduciary, whose duty is that of utmost loyalty to
his principal" (see reasons of Dickson J. at pages
388-389), I proceed now to the factual situation in
this case.
THE ACQUISITION OF PARCEL A
By Order in Council 1036 dated July 29, 1938,
the Province of British Columbia conveyed to the
federal Crown, Penticton Indian Reserve No. 1 (of
which Parcels A and B herein formed a part) "in
trust for the use and benefit of the Indians". In
September of 1938, the Municipality of Penticton
approached the Indians for a lease of some 72.56
acres of land on the Penticton Reserve No. 1 for
use as a municipal airport. The Indian Agent
signed a form of lease on behalf of the Indian
occupants of the land in question. The Indian
occupants signed for themselves as well. The Mu
nicipality also signed the form of lease. The aver
age rent was $6.50 per acre per annum together
with other benefits which will be detailed later
herein. The term for each lease was for five years
renewable for further five-year terms at the option
of the Municipality to a maximum of twenty-five
years in total. These leases were not approved by
the Indian Affairs Branch in Ottawa because of
the intervening requirement of the Department of
Transport to acquire the land for airport purposes.
By letter dated December 6, 1939, the Deputy
Minister of Transport advised the Director of
Indian Affairs, Ottawa, that additional land would
be needed because a larger airport involving longer
runways was envisaged by Transport. This larger
parcel, eventually comprising 154.3 acres is known
as Parcel A.
Heald J. reviewed the evidence concerning
Parcel A. This evidence consisted for the most
part in correspondence of the Indian Agent, the
Indian Commissioner for British Columbia and the
Director, Indian Affairs. His Lordship made refer
ence to a recommendation to Council from the
Minister of Munitions and Supply containing the
following statement: "the negotiations have not
been successful owing to the excessive rental
asked by the Indians, and on the advice of the
Deputy Minister of Justice, it is now proposed to
take proceedings to expropriate the said lands".
In a report sent to Ottawa by the Indian Commis
sioner for British Columbia, facts were set out in
support of an opinion that "the $10.00 per acre
rate asked by them could not be considered
excessive".
On November 16, 1940, Order in Council, P.C.
6594 was passed expropriating .52 of an acre,
being the balance of Parcel A not previously
expropriated.
On January 26, 1941, Order in Council, P.C.
659, and subsequent amending Orders in Council
authorized payment to the Indians of compensa
tion for the land contained in Parcel A at the rate
of $115 per acre. The recommendation to Council
said to be by the Acting Minister of Munitions and
Supply, on the advice of the Director of Air Ser
vices, concurred in by the Assistant Deputy Minis
ter of Transport, recites that the Indians concerned
have agreed to accept compensation at that rate.
As noted by Mr. Justice Urie, the viva voce
evidence at the trial was not of much assistance in
establishing the factual context of the taking of
Parcels A and B. I agree that the relevant facts
must be obtained largely from the documentary
evidence. I have related the documentary evidence
relating to the acquisition of Parcel A which I
consider to be relevant. From that evidence, I
make the following deductions and draw the fol
lowing inferences:
1. The original negotiations between the Indians
and Penticton in 1938 were for a lease of 72.56
acres for a maximum of 25 years.
2. When the Department of Transport became
interested in December of 1939, they contemplated
acquisition either by lease or purchase. They also
contemplated a larger parcel (153.8 acres).
3. During negotiations conducted with the Indi-
ans by Agent Barber, it was assumed by Barber
and his B.C. superior, Major MacKay, that the
Department of Transport wished to lease subject
property.
4. In July 1940, the Indians reluctantly agreed
to a lease of the subject 153.8 acres (Parcel A) for
a term of ten years at an annual rental of $10 per
acre and signed a surrender on this basis. In
recommending that the Department of Transport
agree to this proposal, Major MacKay, the Direc
tor of Indian Affairs for British Columbia, said,
inter alla: "I do not consider the rental required as
excessive".
5. On August 13, 1940, an Order in Council was
passed granting authority to expropriate Parcel A
on the recommendation of the Minister of Muni
tions and Supply, concurred in by the Deputy
Minister of Transport. That Order in Council
stated, inter alla: "That negotiations have been
carried on with the assistance of Indian Affairs
Branch of the Department of Mines and Resources
for the lease of the lands required, but the negotia
tions have not been successful owing to the exces
sive rental asked by the Indians".
6. On about August 22, 1940, the Department
of Transport, through the Department of Indian
Affairs, offered $100 per acre for Parcel A, but
suggesting at the same time as a possible alterna
tive, a 21-year lease with an annual rental of $5
per acre.
7. On August 27, 1940, Agent Barber presented
this proposal to the Indians concerned. Of the
eight Indians at the meeting, only one agreed to
accept the offer of $100 per acre. All of the others
were adamant in their refusal to accept this pro
posal. The alternative lease proposal does not
appear to have been canvassed at the meeting.
8. On August 28, 1940, Major MacKay present
ed the Indians' case to his superiors in Ottawa. In
his letter he made the following points:
(a) Under the proposed lease to the Municipality
of Penticton at $6.50 per acre, the Municipality
undertook to clear, level and seed the land to
suitable hay and allowed the Indians to crop the
land as well. This represented a very substantial
benefit to the Indians in addition to the annual
rental to be paid.
(b) The expropriation is for 153 acres whereas the
Penticton lease was only for 72 acres, leaving the
hay meadows of the Indian cattlemen. The 153
acres of Parcel A expropriated by the Department
of Transport almost covers the entire useful por
tion of the land of some of the Indian occupants,
thereby seriously impairing their means of
livelihood.
(c) As to valuations for Parcel A—In 1920, Indian
Agent Ball valued it at $200 per acre; in 1932 the
Kettle Valley Railroad paid $300 per acre for
similar land in the vicinity; the Provincial Depart
ment of Public Works took inferior land for the
highway contiguous to Parcel A for $250 per acre
in 1929 and for a higher price in 1932.
(d) While Parcel A was originally thought to
comprise mostly sandy soil, it was later established
that the sand was a superficial layer of about three
or four inches underlaid by very good soil, mostly
sub-irrigated sufficiently to grow good hay crops.
(e) Proximity to the City of Penticton has given
Parcel A an added value to that of mere farm
land.
9. In October of 1940, as a result of further
negotiations with the Indians, Agent Barber
reported that some of them would now settle at
$100 per acre and he recommended that an offer
of $110 per acre be made to them.
10. The January 26, 1941 Order in Council and
subsequent Orders in Council authorized settle
ment for Parcel A at $115 per acre.
Bearing in mind that it is the Crown which owes
the fiduciary duty to the Indians, the facts of this
case clearly raise the issue of conflict of interest, in
my view. It seems evident that two Departments of
the Government of Canada were in conflict con
cerning the manner in which the Indian occupants
of Parcel A should be dealt with. The evidence
seems to unquestionably establish that the officials
of the Indian Affairs Branch were diligent in their
efforts to represent the best interests of the Indian
occupants. On the other hand, the Department of
Transport was anxious to acquire the additional
lands in the interests of air transport. This situa
tion resulted' in competing considerations. Accord
ingly, the federal Crown was in a conflict of
interest in respect of its fiduciary relationship with
the Indians. The law is clear that "one who under
takes a task on behalf of another must act exclu
sively for the benefit of the other, putting his own
interests completely aside" and that "Equity fash
ioned the rule that no man may allow his duty to
conflict with his interest." On this basis, the
federal Crown cannot default on its fiduciary obli
gation to the Indians through a plea of competing
considerations by different departments of Govern
ment.
It also seems clear that "provided the trust
beneficiary acts with full knowledge of the trust
affairs, a sale by him of his interest to a trustee is
a valid contract". However, in these circumstances
"the onus of proof is on the trustee or fiduciary to
show that the beneficiary did indeed have all the
' The above quotations are to be found on pp. 618 and 619 of
the Law of Trusts in Canada, Waters, 1974. To the same effect
is the case of City of Edmonton v. Hawrelak and Sun-Alta
Builders Ltd. et al., [1972] 2 W.W.R. 561 per Kirby J. at pp.
583-592 inclusive (affirmed [1973] 1 W.W.R. 179 (Alta.
S.C.)).
relevant information known to the trustee", (if
there is relevant information known to neither the
trustee nor the beneficiary, presumably this is of
no significance) "and the courts are scrupulous in
ensuring that no advantage could have been taken
of the beneficiary". 2
Based on the above-stated principles, and apply
ing them to the facts in this case, I am unable to
conclude that the federal Crown acted "exclusively
for the benefit" of the Indians in the acquisition of
Parcel A. The Indians were unwilling to part with
any of their land, other than the 72 acres which
they had originally agreed to lease to the Munici
pality of Penticton. Their reasons were logical and
reasonable. However, they finally and reluctantly
agreed to a ten-year lease. The officials in Indian
Affairs recommended this lease. This advice was
ignored. The reason given was that the amount of
rental being asked by the Indians was unreason
able. The Department of Transport produced no
evidence that the annual rental was unreasonable.
As a matter of fact, all of the evidence on the
record is to the contrary. The situation is the same
with respect to the final settlement at $115 per
acre which deprived the Indians of their total
interest in these lands. No appraisals were pro
duced to support this figure. On the other hand,
there was evidence of sales of comparable property
many years earlier at prices of $200 to $300 per
acre.
In my view, the unmistakable inference to be.
drawn from this record is that, in the final deci-
sion-making process by the Governor in Council,
the views of the Department of Transport pre
vailed over the views and representations of the
Department of Indian Affairs. Undoubtedly, the
Department of Transport had good and sufficient
reason for requiring subject lands at an early date
for its purposes but that circumstance did not
relieve the federal Crown of its fiduciary duty to
the Indians. Accordingly, I have no difficulty in
concluding that the federal Crown has not dis
charged the onus cast upon it to show that no
2 The above quotations are taken from p. 636 of the Law of
Trusts in Canada, Waters, 1974.
advantage was taken of the Indians in the
transaction.
It follows, in my view, that there was a breach
of fiduciary duty in respect of the acquisition of
Parcel A.
THE ACQUISITION OF PARCEL B
Heald J. proceeded to exhaustively review the
evidence as to Parcel B. Reference was made to
the "independent" appraisals in the amounts of
$6,831 and $6,810 obtained by the Deputy Minis
ter of Transport and that of $16,958 obtained by
Indian Affairs. In a letter to the Department of
Transport, Indian Affairs submitted that "they [the
Indians] are entitled to compensation, in our judg
ment, for the complete disruption of this Indian
community's way of life and for the cost of re
establishing the group where the complete
resumption of that way of life may be effected.
Owing to their race some opposition to receiving
them into available white communities will be
encountered and that opposition will be reflected
in the price they will have to pay for lands or
properties as valuable and as useful to them as
those they have been compelled to vacate and
give up." In view of those considerations, it was
suggested that "the original compensation asked
by our informed and competent Indian Agent, Mr.
A.H. Barber, and which he fixed at $28,328.00, is
not in our judgment excessive". The letter con
cluded that if Transport was prepared to raise its
bid to about $25,000, "we will try to obtain the
concurrence of the Indians". The Deputy Minister
of Transport replied that an expenditure of
$25,000 could not be justified and that Council's
authority to expropriate would be sought.
On January 20, 1944, the Indian Agent reported
to the Commissioner that these "people have
been very patient and appear to have trusted me
to make a settlement that would be fair to them
... they want this money and would accept a
ridiculously low price if they were offered cheques
in immediate settlement and this is hardly a fair
situation for an official to be placed in". The
Agent noted the possibility of having to pay costs
if the Indians were unsuccessful in arbitration or
Court proceedings.
On January 28, 1944, the Commissioner in a
letter to Indian Affairs, Ottawa, inquired whether
the claim could be settled at $15,000 plus 10% or
$16,500. "These suggestions are born of sheer
desperation, the Indians having been deprived of
their livelihood for the past year while the Depart
ment of Transport by threat of long delayed arbi
tration proceedings tied up any possibility of set
tlement other than on their terms. No one,
including the C.P.R., West Kootenay Power &
Light Company, Dominion and Provincial Depart
ments of Public Works, had previously questioned
valuations of this property amounting in some
cases as high as $400.00 per acre, $250.00 to
$300.00 being a common price."
On February 24, 1945, Indian Affairs wrote to
the Agent suggesting that "we can get
$15,000.00 for an amicable settlement" and
urging him to call a meeting of the Indians in an
attempt to agree on a settlement proposal which
would avoid the matter being dealt with by the
Exchequer Court. The Agent replied that it was
impossible to get these people together at a
meeting and that it was unlikely that a satisfactory
understanding could be arrived at. But on January
9, 1946, the Agent wrote to his Ottawa Headquar
ters that he had met with the Indians and they
would accept $15,000 for an immediate settle
ment. Transport accepted this offer. The Agent
accordingly met with the Indians on February 1,
1946. The vote was: 18 for surrender with 9
opposed. 18 were absent, 10 of these being in
the United States. The Agent's report to Indian
Affairs contained the following opinion: "I would
advise that this meeting was a very difficult one
and I have not the least doubt but that, if all
members of the Band had been present, or
should the surrender be re-submitted to the Band,
it will be defeated." An Order in Council was
immediately made requiring the surrender and
fixing the compensation at $15,000.
Based on the documentary evidence relating to
the acquisition of Parcel B, I draw the following
inferences and reach the following conclusions:
1. In July of 1942, the Department of National
Defence decided to expand the Penticton Airport
thus enabling it to serve as an emergency landing
field for the West Coast defence system. For this
purpose, it was decided to take an additional 120
acres (Parcel B) from the Penticton Indians. The
land acquisition cost for Parcel B was estimated at
$50 per acre by National Defence.
2. National Defence and/or Transport asked the
Department of Indian Affairs to approach the
Indians with respect to the acquisition of Parcel B.
Indian Affairs agreed to offer "the fullest co-oper
ation possible" while at the same time giving full
consideration to the interests of the Indians.
3. Without expropriation procedures being
instituted and without a surrender of any kind and
without any authority from the Indians, Transport
commenced work on Parcel B in September of
1942. Meanwhile the officials of Indian Affairs
were systematically inquiring of Transport as to
when the Indians could expect a settlement in
respect of Parcel B. Inquiries were made of Trans
port in November of 1942 to no avail. In Decem-
ber of 1942, the Indians were anxious to receive at
least an advance for Christmas. This request like
wise fell on deaf ears.
4. Finally in May of 1943, Transport submitted
two appraisals concerning Parcel B. These apprais
als both valued Parcel B at approximately $6,800.
5. In November of 1943, Indian Affairs
obtained an appraisal of Parcel B which valued it
at $16,958.75. However, the officials of Indian
Affairs were not prepared to accept this figure.
They pointed out that the Indians were entitled to
compensation for complete disruption of their way
of life and for the cost of re-establishing the group
elsewhere. On this basis, Agent Barber fixed a
valuation of Parcel B at $28,328 with the senior
officials suggesting a compromise offer of $25,000.
6. The proposal was summarily dismissed on
December 4, 1943, by Transport with the com
ment: "As we cannot justify this expenditure a
recommendation is being made to Council for
authority to expropriate the land in question and if
we are not able to arrive at an amicable settlement
for the matter to be referred to arbitration." The
Order in Council authorizing expropriation was
passed on December 20, 1943.
7. On January 28, 1944, the Indian Commis
sioner for British Columbia, in reporting to his
Ottawa Headquarters, suggested possible settle
ment in the area of from $16,000 to $18,000. He
went on to add: "These suggestions are born of
sheer desperation, the Indians having been
deprived of their livelihood for the past year while
the Department of Transport by threat of long
delayed arbitration proceedings tied up any possi
bility of settlement other than on their terms." He
went on to observe that: "No one, including
C.P.R., West Kootenay Power & Light Company,
Dominion and Provincial Departments of Public
Works, had previously questioned valuations of
this property amounting in some cases as high as
$400.00 per acre, $250.00 to $300.00 being a
common price." He also makes reference to "the
niggardly attitude of the Department of Trans
port". He also observes that the situation with
respect to Parcel B clearly illustrates the value of
obtaining a firm agreement on price before allow
ing the taking party the right of entry and use.
8. On March 9, 1944, some 18 months after
Transport took possession of Parcel B and com
menced construction thereon, an advance on com
pensation in the sum of $6,500 was finally paid.
9. On May 4, 1944, Agent Barber held a meet
ing with the Indians where the Indians were very
critical of Barber and the Indian Affairs Depart
ment for "allowing the lands to be taken before a
settlement as to compensation was made".
10. On February 24, 1945, Indian Affairs,
Ottawa, wrote to Agent Barber expressing the
view that Transport would likely pay $15,000 for
an amicable settlement but if the matter was
referred to the Exchequer Court they (Transport)
would not offer any such sum "but will offer
something in the neighbourhood of $7,000.00 to
$8,000.00". Barber was asked to ascertain the
Indians' reaction to a $15,000 settlement.
11. Barber replied under date of March 14,
1945, after meeting with the Indians. He reported
that seven of the Indian occupants had retained a
Vancouver lawyer and they were depending on
him to obtain a larger compensation figure as a
result of the pending proceedings in the Exchequer
Court. Mr. Kruger, the eighth claimant, advised
he was prepared to settle on the basis of a total
figure of $15,000 for Parcel B.
12. On January 7, 1946, the Indians, at a meet
ing on the Reserve, after "a long and at times
heated discussion", agreed to settle for $15,000
provided settlement was made expeditiously.
13. Thereupon, Transport agreed and requested
Indian Affairs to arrange for the necessary surren
der from the Indian Band.
14. Accordingly, a further meeting was held by
Barber with the Band on February 1, 1946, to
obtain such a surrender. After much discussion
and dissent, 18 members voted in favour and 9
members voted against the execution of a surren
der. Mr. Barber observed that while a majority of
the members present at the meeting voted in
favour of surrender, it still did not constitute a
majority of the voting strength of the Band since
46 members were eligible to vote. He observed
further that if all members of the Band had been
present at the meeting, he had "not the least
doubt" that the surrender would have been defeat
ed. According to Barber, much of the Indians'
dissatisfaction arose because they did not under
stand why a surrender was necessary in respect of
Parcel B when it had not been required in respect
of Parcel A. Also they could not understand why
any surrenders were necessary when they had been
dispossessed for the past 3 years and repeatedly
advised that the Government had expropriated the
land.
15. On February 5, 1946, an Order in Council
was passed requiring the surrender and fixing the
compensation. In that Order in Council, it was for
the first time mentioned that the Deputy Minister
of Justice gave advice to the effect that the Indi-
ans' land could not be taken under the Expropria
tion Act [R.S.C. 1927, c. 64] but that transfer
could only be effected by a duly-executed
surrender.
It is clear, in my view, that the conflict of
interest between two Departments of the Govern
ment of Canada which was so apparent in the
dealings with respect to Parcel A is equally appar
ent when the dealings concerning the acquisition of
Parcel B are scrutinized. Indian Affairs attempted
valiantly to represent the Indians' best interests.
On the other hand, National Defence and Trans
port were anxious to acquire Parcel B and enlarge
the airport. An indication of their seeming indif
ference to the plight of the Indians is shown by the
initial valuation—only $50 per acre; by the fact
that they had possession for some 18 months with
out paying the Indians anything on account of
compensation; by their rather leisurely approach to
negotiations for compensation as compared to
their great haste in taking possession and depriving
the Indians of their means of livelihood. It seems
clear from the evidence that Transport chose to
ignore the considered opinions of officials of the
Department of Indian Affairs as to value and
made little effort to seriously negotiate a settle
ment. Their only answer was to expropriate first
and then negotiate thereafter. Commissioner
MacKay described their tactics most eloquently
when he said that his suggestions for settlement
were "born of sheer desperation" because of
Transport's tactics of delay which frustrated a fair
settlement. He also characterized Transport's atti
tude as "niggardly". Thus, after being out of
possession of Parcel B for more than 3 1 / 2 years,
being deprived of their living therefrom, and
having received only $6,500 on account of compen-
sation, a minority of the Indians entitled to vote
approved the surrender.
On these facts, can it be concluded that, in these
negotiations culminating with the acquisition of
Parcel B, and settlement of compensation therefor,
the federal Crown can be said to have been acting
exclusively for the benefit of the Indians? I think
not. Likewise, I am not satisfied that there was full
disclosure to the Indians of all relevant facts. The
evidence establishes that they were kept in the
dark for very large periods of time. Their land was
taken from them, no offers of compensation were
forthcoming in a timely fashion. One can under
stand their confusion at the way these matters
were being handled. They were told that their land
was expropriated, then they were told that, not
withstanding the expropriation, they would have to
execute a surrender in respect of Parcel B but not
in respect of Parcel A. Bearing in mind that the
onus is on the Crown to establish that the Indians
were in possession of all the relevant information
known to it, I have no hesitation in concluding that
the Crown has not discharged that onus on these
facts. Characteristic of a lack of disclosure, in my
view, is the non-disclosure of the opinion of the
Deputy Minister of Justice referred to supra given
to other officials of the Crown that the Indians'
interest in the land could be taken only by surren
der and not by expropriation. In view of my agree
ment with my brother Urie J. that the expropria
tions were legally correct, I do not cite this
non-disclosure as a legal impediment to the
Crown's actions per se but I think it indicative of
the attitude of the Crown's servants outside the
Indian Affairs Branch. Their attitude seemed to be
that they were not concerned in any way with the
welfare of the Indians and were leaving protection
of the Indians' interests to the Department of
Indian Affairs. That may have been a defensible
posture for the officials of other departments to
adopt, given their own urgent priorities in wartime.
However, the Governor in Council is not able to
default in its fiduciary relationship to the Indians
on the basis of other priorities and other consider
ations. If there was evidence in the record to
indicate that careful consideration and due weight
had been given to the pleas and representations by
Indian Affairs on behalf of the Indians and, there
after, an offer of settlement reflecting those
representations had been made, I would have
viewed the matter differently. Absent such evi
dence, I conclude that, as in the case of Parcel A,
there was also a breach of fiduciary duty in respect
of the acquisition of Parcel B.
LIMITATION OF ACTION AND LACHES
In my view the breach of fiduciary duty
occurred in respect of Parcel A, at the very latest,
in approximately January of 1941, when the
Orders in Council were passed authorizing settle
ment for Parcel A at $115 per acre. In respect of
Parcel B, the breach of fiduciary duty occurred, at
the very latest, in approximately March and April
of 1946, when the compensation of $15,000 for
Parcel B was paid to the Indians. The within
statement of claim was filed on March 23,
1979, 38 years and 33 years respectively after the
causes of action arose.
Subsection 38(1) of the Federal Court Act
[R.S.C. 1970 (2nd Supp.), c. 10] provides that:
"the laws relating to ... the limitation of actions
in force in any province ... apply to any proceed
ings in the Court in respect of any cause of action
arising in such province". Subsection 38(2) pro
vides that: "the laws relating to ... the limitation
of actions referred to in subsection (1) apply to
any proceedings brought by or against the
Crown".
Accordingly, it is necessary to consider the law
of British Columbia respecting limitation of
actions, at the relevant times. The applicable Stat
ute of Limitations in 1941 and 1946, when these
causes of action arose, was c. 159, R.S.B.C. 1936.
Under that statute, the limitation period for
actions relating to real property was stated to be
twenty years. However section 38 of that Act
provides: "In every case of a concealed fraud, the
right of any person to bring a suit in equity for the
recovery of any land or rent of which he, or any
person through whom he claims, may have been
deprived by such fraud shall be deemed to have
first accrued at and not before the time at which
such fraud shall or with reasonable diligence might
have been first known or discovered". Unlike the
Guerin case, the causes of action in the instant
case could have been discovered if the appellants
had exercised reasonable diligence at the same
time the causes of action arose. Putting the appel
lants' case at its very highest, the effective dates
under this section would be, in the case of Parcel
A, January of 1941, and in the case of Parcel B,
February of 1946. In both cases then, the limita
tion period would have expired long before this
action was commenced, if the British Columbia
Statute of Limitations of 1936 is applied.
However, there is a restriction placed upon the
operation of the 1936 Statute of Limitations by
section 83 of the Trustee Act, R.S.B.C. 1936, c.
292. 3 The effect of that section, and the common
law is to provide that in cases where the claim (1)
is founded upon any fraud or fraudulent breach of
trust or (2) is to recover trust property, there is no
limitation period for actions by beneficiaries
against trustees.
3 Said section 83 reads:
83. (1.) In any action or other proceeding against a trustee or
any person claiming through him, except where the claim is
founded upon any fraud or fraudulent breach of trust to which
the trustee was party or privy, or is to recover trust property, or
the proceeds thereof still retained by the trustee, or previously
received by the trustee and converted to his use, the following
provisions shall apply:—
(a.) All rights and privileges conferred by any Statute
of Limitations shall be enjoyed in the like manner and to
the like extent as they would have been enjoyed in such
action or other proceeding if the trustee or person
claiming through him had not been a trustee or person
claiming through him:
(b.) If the action or other proceeding is brought to
recover money or other property, and is one to which no
existing Statute of Limitations applies, the trustee or
person claiming through him shall be entitled to the
benefit of and be at liberty to plead the lapse of time as
a bar to such action or other proceeding, in the like
manner and to the like extent as if the claim had been
(Continued on next page)
There may be some doubt as to whether the
British Columbia Trustee Act applies to the feder
al Crown in light of the views expressed in Guerin
that the federal Government was not a trustee but
that it had fiduciary obligations which imposed
trust-like duties. However, in Guerin the question
of a constructive trust did not arise since there was
no unjust enrichment in so far as the Crown was
concerned. In the case at bar, on my view of the
facts, there was unjust enrichment to another ema
nation of the federal Crown which might well give
rise to a constructive trust in this case. As con
structive trustees are defined as trustees in the
British Côlumbia Act, I assume, for the purposes
of this discussion, that the federal Crown can be
considered as a "trustee" within the meaning of
section 83. The next question to be answered is
whether the appellants' claim comes within either
of the two classes noted supra. In so far as the first
category is concerned, the Trial Judge said in his
reasons (at page 519) that: "The plaintiffs, at trial,
expressly abandoned reliance on all pleadings
alleging fraudulent conduct." Accordingly, the
appellants are not able to bring themselves within
the first category referred to supra. The second
category relates to actions to recover trust prop
erty. In their statement of claim, the appellants
have asked for recovery of the property, and, in the
alternative, compensation for breach of a fiduciary
duty. Since, as noted supra, I have the view that
the validity of the expropriation procedures herein
are beyond question, the appellants have no basis
for an action to recover possession of the trust
property itself. That leaves the question as to
(Continued from previous page)
against him in an action of debt for money had and
received, but so nevertheless that the Statute shall run
against a married woman entitled in possession for her
separate use, whether with or without a restraint upon
anticipation, but shall not begin to run against any
beneficiary unless and until the interest of such benefici
ary shall be an interest in possession.
(2.) No beneficiary, as against whom there would be a good
defence by virtue of this section, shall derive any greater or
other benefit from a judgment or order obtained by another
beneficiary than he could have obtained if he had brought such
action or other proceeding and this section had been pleaded.
(3.) This section shall apply only to actions or other proceed
ings commenced after the first day of January, 1906, and shall
not deprive any executor or administrator of any right or
defence to which he is entitled under any existing Statute of
Limitations.
whether the appellants' alternative claim for com
pensation can be said to be an action for "the
recovery of trust property" within the meaning of
section 83. This question was considered by the
Supreme Court of Ontario in the case of McLellan
v. Milne & Magee 4 where it was held in relation to
a limitation section of the Ontario Act containing
almost identical language to section 83, that an
action requiring a solicitor to make compensation
to his client for a breach of his duty arising out of
a fiduciary relationship was not an action to recov
er trust property. Such a claim is very similar to
the alternative claim in this case. I share the view
of McTague J. and, accordingly, have concluded
that the appellants' alternative claim for compen
sation cannot be characterized as an action for
"the recovery of trust property". For all of the
above reasons, it is my view that the 1936 B.C.
Statute of Limitations, as qualified by the 1936
Trustee Act, did not entitle the appellants to com
mence their action in 1979.
However, even if I am in error in the conclusion
reached supra that the provisions of section 83 of
the 1936 Trustee Act of British Columbia do not
operate so as to prevent the commencement of any
limitation period, I think that, having regard to the
transitional provisions of the Limitation Act of
British Columbia of 1975 5 which was in force in
1979 when the action was commenced, the appel
lants' claim is statute barred, in any event. That
statute came into force on July 1, 1975. Subsection
14(3) thereof provides:
14....
(3) If, with respect to a cause of action that arose before this
Act comes into force, the limitation period provided by this Act
is shorter than that which formerly governed the cause of
action, and will expire on or before July 1, 1977, the limitation
period governing that cause of action shall be the shorter of
' [1937] 3 D.L.R. 659 (Ont. S.C.), at p. 671, per McTague J.
5 Limitation Act, R.S.B.C. 1979, c. 236.
(a) 2 years from July 1, 1975; or
(b) the limitation period that formerly governed the cause of
action.
Assuming the applicability of the 1936 Trustee
Act and assuming that there was no limitation
period thereunder applicable to this claim, it would
appear, applying subsection 14(3) of the 1975 Act,
that the shorter period mentioned in paragraph (a)
thereof would apply in this case. Thus, if subsec
tion 14(3) of the 1975 Act applies, the limitation
period would have expired on July 1, 1977, almost
two years prior to this claim being filed.
If, on the other hand, the transitional provisions
of the 1975 Limitation Act do not apply, then it is
likely that the provisions of sections 8 and 9 of that
Act would operate so as to bar the within action.
Subsection 8(1) is referred to as an "ultimate
limitation" section and provides that:
8. (1) Subject to section 3(3), but notwithstanding ... a
postponement or suspension of the running of time under
section 6 ... no action to which this Act applies shall be
brought after the expiration of 30 years from the date on which
the right to do so arose ...
(Section 6 of the said 1975 Limitation Act is
similar to section 83 of the 1936 Trustee Act.)
Since I do not think the exceptions mentioned in
subsection 3(3) apply here (given the validity of
the expropriations, this is not a case of trespass),
and as at least thirty-three years have passed
between the time the cause of action arose and the
statement of claim was filed, I accordingly con
clude that, pursuant to subsection 8(1) of the
governing Limitation Act at the time the action
was commenced, the within cause of action is
statute barred. Additionally, subsection 9(1) of the
1975 Act provides that on the expiration of the
limitation period fixed by the Act, the cause of
action is extinguished.
For all the above reasons, it is my reluctant
opinion that the appellants' causes of action herein
are statute barred. Because of this conclusion, it is
unnecessary to consider the defence of laches
raised by the respondent.
On this basis, it necessarily follows, in my view,
that the appeal should be dismissed with costs.
* * *
The following are the reasons for jugdment
rendered in English by
ÃœRIE J.
EDITOR'S NOTE
This is an appeal from the judgment of
Mahoney J. dismissing an action arising out of the
taking, on two occasions, of lands from an Indian
reserve. It was alleged that the defendant had
failed to exercise that degree of care, steward
ship and prudent management required of a trus
tee. The plaintiffs sought a declaration to that
effect together with damages.
Parcel A was required by the Department of
Transport for an airport as it was in a valley which
was one of the few places Trans-Canada Air
Lines aircraft could safely land in bad weather in
the mountain area. The Indians had earlier agreed
to lease 72.56 acres for a municipal airport at a
rent of $6.50 per acre per annum plus other
consideration. The Department needed 153.8
acres. The Indian Agent, who conducted negotia
tions on behalf of the Indians, reported to his
superior that they were not in favour of leasing the
increased acreage. The Agent, however, got
them to agree to lease the land required for 10
years at $10 an acre. The Indians wanted the
higher rental since the increased area took in their
hay and meadow lands. The Department decided
to expropriate Parcel A and offered $100 per acre
as compensation. P.C. 659, approved January 29,
1941, fixed the compensation at $115 per acre
and a recital in the Order stated that the Indians
were content. The compensation was, in fact,
accepted by the Indians.
Parcel 8, a further 120 acres, was needed by
the Department of National Defence for Air to
serve as an emergency landing field of the West
Coast defence system. Work on Parcel 8 com
menced in September 1942, prior to the land
being expropriated or otherwise acquired. The
Indians objected to the taking of possession
before payment. Negotiations took place. Expro
priation was completed in February 1944. In May,
the Indians rejected an offer of an interim pay
ment on account of compensation. On January 9,
1946, the Indian Agent reported that they would
accept $15,000 if paid immediately and to avoid
litigation. On January 14 the Deputy Minister of
Transport advised Indian Affairs that the settle
ment offer was accepted. But on February 1 the
Indian Agent, acting on instructions from his supe
riors, convened a meeting to obtain Band consent
to the surrender of Parcel B. 28 out of 46 eligible
voters had been in attendance and the vote was
18 for surrender with 9 opposed and 1 abstention.
The Agent reported that the surrender proposal
would have been defeated had all Band members
been present. The Agent further reported that the
Indians could not understand why they were
being requested to surrender land which had
been taken from them 3 years previously. He
added that it had been embarrassing for him to
have to ask them to agree to allow the Depart
ment to sell land which had supposedly been
expropriated. The surrender was accepted by the
Crown and compensation paid. Apparently the
reason that the Agent had been told to obtain a
surrender was that the Department of Justice had
given an opinion that Indian lands could not be
expropriated.
The Indians argue that execution of the surren
der did not constitute consent to the Crown's
breach of fiduciary duty in view of their lack of
knowledge as to the legality of the expropriation.
A fully-informed consent could not be given to a
breach not fully reported by a defaulting fiduciary.
It was pointed out that a surrender in respect only
of Parcel B was given. The Indians submit that by
resorting to expropriation, the Department of
Transport prevented Indian Affairs from using the
strongest weapon in its arsenal: the right to refuse
to sell or lease the land except upon appropriate
terms. It was argued that the Crown's fiduciary
duty to the Indians had accordingly been
breached.
II
THE ISSUES
The appellants' memorandum of fact and law
defines the issues as follows:
1. Does s. 48 of the Indian Act, R.S.C. 1927, Chapter 98,
provide a right to the Respondent (hereinafter called the
"Crown") to expropriate lands from an Indian reserve? It is
submitted it does not.
2. If s. 48 of the Indian Act permits the Crown to expropriate
reserve lands, was such jurisdiction properly exercised in the
case at bar? The Appellants again submit that this question
should be answered in the negative. A threshold question which
arose in the reasons of the learned trial Judge, however, is
whether or not the Court can enquire into the propriety of the
exercise of the jurisdiction. The Appellants submit that it can.
3. Given the finding by the learned trial Judge that the Crown
stood as a fiduciary vis-Ã -vis the Appellants (from which find
ing no appeal has been taken by either of the parties), has there
been a breach of that fiduciary duty by the Crown, notwith
standing whatever powers of expropriation it might have prima
fade? The Appellants submit that there has been such a
breach, even if this Honourable Court finds that there was a
jurisdiction to expropriate the land involved and that the exer
cise of that jurisdiction satisfied the relevant statutory require
ments. The appellants take this position because the lands at
issue are not only subject to the general law regarding Indian
reserve lands, but are also subject to the specialized rules
regarding trust property in British Columbia. The Crown is,
therefore, subject to the rules prohibiting a fiduciary from
acquiring trust property for himself or allowing himself to be in
a position whereby his personal interests may conflict with his
duties as a fiduciary.
4. If there has been a breach of fiduciary duty by the Crown,
have the Appellants consented to it so as to absolve the Crown
from liability for same? It is submitted that no such consent
has been given.
III
THE ARGUMENT
1. Section 48 of the Indian Act
Since the submissions of appellants' counsel as
to the scope and applicability of section 48 of the
Indian Act, R.S.C. 1927, c. 98 are intertwined, to
some extent, with a consideration of section 50 of
that Act, it would be convenient to set out both
sections hereunder.
48. No portion of any reserve shall be taken for the purpose
of any railway, road, public work, or work designed for any
public utility without the consent of the Governor in Council,
but any company or municipal or local authority having statu
tory power, either Dominion or provincial, for taking or using
lands or any interest in lands without the consent of the owner
may, with the consent of the Governor in Council as aforesaid,
and subject to the terms and conditions imposed by such
consent, exercise such statutory power with respect to any
reserve or portion of a reserve.
2. In any such case compensation shall be made therefor to
the Indians of the band, and the exercise of such power, and the
taking of the lands or interest therein and the determination
and payment of the compensation shall, unless otherwise pro
vided by the order in council evidencing the consent of the
Governor in Council, be governed by the requirements appli
cable to the like proceedings by such company, municipal or
local authority in ordinary cases.
3. The Superintendent General shall, in any case in which an
arbitration is had, name the arbitrator on behalf of the Indians,
and shall act for them in any matter relating to the settlement
of such compensation.
4. The amount awarded in any case shall be paid to the
Minister of Finance for the use of the band of Indians for
whose benefit the reserve is held, and for the benefit of any
Indian who has improvements taken or injured. R.S., c. 81, s.
46; 1911,c. 14, s. 1.
50. Except as in this Part otherwise provided, no reserve or
portion of a reserve shall be sold, alienated or leased until it has
been released or surrendered to the Crown for the purposes of
this Part; but the Superintendent General may lease, for the
benefit of any Indian, upon his application for that purpose, the
land to which he is entitled without such land being released or
surrendered, and may, without surrender, dispose to the best
advantage, in the interests of the Indians, of wild grass and
dead or fallen timber.
2. The Governor in Council may make regulations enabling
the Superintendent General without surrender to issue leases
for surface rights on Indian reserve, upon such terms and
conditions as may be considered proper in the interest of the
Indians covering such area only as may be necessary for the
mining of the precious metals by any one otherwise authorized
to mine such metals, said terms to include provision of compen
sating any occupant of land for any damage that may be caused
thereon as determined by the Superintendent General.
Counsel for the appellants argued forcefully that
the Indian Act, 1927 confers no jurisdiction on the
Crown to expropriate Indian reserve lands. He said
that section 48 precludes any compulsory taking,
for the purpose of a "public work", without the
prior consent of the Governor in Council. As he
interpreted the section, it provides that, on the
obtaining of such consent, "any company or
municipal or local authority having statutory
power, either Dominion or provincial" to expropri-
ate lands may expropriate reserve lands, subject to
any restrictions imposed by the consent. Nowhere
did counsel find in the section an express or
implied provision conferring on the Crown, as
distinct from companies or authorities having a
statutory power to take, the jurisdiction to take
reserve lands.
Moreover, he contended, even if the Crown, on
consent, is entitled to expropriate it can only do so
pursuant to the Expropriation Act, R.S.C. 1927, c.
64, in respect of a "public work" as that term is
defined in paragraph 2(g) of that Act, which does
not include airports. That definition reads as
follows:
2. In this Act, unless the context otherwise requires,
(g) "public work" or "public works" means and includes the
dams, hydraulic works, hydraulic privileges, harbours,
wharfs, piers, docks and works for improving the naviga
tion of any water, the lighthouses and beacons, the
slides, dams, piers, booms and other works for facilitat
ing the transmission of timber, the roads and bridges,
the public buildings, the telegraph lines. Government
railways, canals, locks, dry-docks, fortifications and
other works of defence, and all other property, which
now belong to Canada, and also the works and proper
ties acquired, constructed, extended, enlarged, repaired
or improved at the expense of Canada, or for the
acquisition, construction, repairing, extending, enlarging
or improving of which any public moneys are voted and
appropriated by Parliament, and every work required for
any such purpose, but not any work for which the money
is appropriated as a subsidy only;
As to the latter argument, the learned Trial
Judge, after quoting paragraph 2(g) in full and
emphasizing the portion underlined above, dealt
with it as follows [at page 515]:
The portion of the definition which I have emphasized is clearly
severable from the particular works enumerated before it and is
not intended to be limited to works similar to those enumer
ated. Recitals in the pertinent Orders in Council, exs. P-44 as
to Parcel "A" and P-46 as to Parcel "B", make clear that
public moneys had been voted and appropriated for their
acquisition. The Aeronautics Act, R.S.C. 1927, c. 3 [now
R.S.C. 1970, c. A-3], provided:
3. It shall be the duty of the Minister
(c) to construct and maintain all Government aerodromes
and air stations, including all plant, machinery and
buildings necessary for their efficient equipment and
upkeep;
Airports were, at the relevant time, public works within the
contemplation of the Expropriation Act. Furthermore, subse
quent decisions make clear that once land was taken, as were
both Parcels "A" and "B", by the procedure of recording the
appropriate documents in the Land Titles Office under s. 9 of
the Expropriation Act, it was not open to question that it had
been taken for a "public work" ....
I agree with this reasoning and conclusion so
that it is unnecessary for me to elaborate upon it.
I turn now to the more difficult aspect of the
argument based on subsection 48(1) of the Indian
Act which I suspect did not receive the attention of
counsel before the Trial Judge that it did in this
Court. On an initial reading, counsel's argument,
supra, has considerable force particularly when
read with subsection (2). It will be noted that that
subsection commences with the words "In any
such case" which obviously refer to a case
envisaged by the wording of subsection (1). At
first blush a case of that kind would mean where
"any company or municipal or local authority
having statutory power ... for taking or using
lands ... with the consent of the Governor in
Council as aforesaid" (emphasis added) exercised
such statutory power with respect to the taking of
any reserve or portion of a reserve. The words "as
aforesaid" must relate to the first words in the
subsection, namely "No portion of any reserve
shall be taken for the purpose of any ... public
work ... without the consent of the Governor in
Council". The only limiting factor relating to the
"taking" body in those words, so far as this case is
concerned, is that the taking must be for the
purpose of a "public work". It is not until after the
word "but" that there is reference made to specific
bodies having "statutory power ... for taking".
If the meaning to be ascribed to the subsection
is that for which the appellants contend, why did
the draftsman deem it necessary by the balance of
the subsection to limit the generality of the first
three lines in it by specifying bodies other than the
Crown who had the power of compulsory taking?
Surely it was to distinguish the position of such
corporations or authorities from that of the Crown
by enabling the imposition of "terms and condi
tions" in the consent. Read that way, the interpre
tation of the subsection given by the Trial Judge in
the following passage [at page 516] appears to be
supported and correct:
The fundamental provision of s-s. 48(1) is that no compulsory
taking may be effected without the required consent; the
balance of the subsection amplifies, rather than limits, that
requirement, making clear that the consent may be given to any
private or public authority and that conditions may be imposed.
It would be an odd result indeed, if, under s-s. 48(1), the
Governor in Council, without the concurrence of a band in
surrendering reserve lands, could consent to another expropriat
ing authority taking those lands but could not so consent when
the expropriating authority was the Crown in right of Canada
itself.
Provisions in a statute should, of course, be
construed in the context in which they appear.
That being so, subsection (2) of section 48 cannot
be ignored. Not only does the subsection com
mence with the words "In any such case", which
can only be referable to subsection (1), but the last
three lines thereof refer to the determination of the
compensation payable on a taking of lands which
shall "be governed by the requirements applicable
to the like proceedings by such company, munic
ipal or local authority in ordinary cases" (empha-
sis added). Those are the bodies referred to in the
latter part of subsection (1) as having the statutory
power to take lands. How then is the construction
of subsection (1) given by the Trial Judge affected
by the limited scope of the directions as to the
determination of compensation given by subsection
( 2 )?
To assist in answering that question it is neces
sary, in my view, to examine the legislative history
of section 48. The first appearance of its predeces
sor was in The Railway Act, 1868 [31 Vict., c.
68], as section 37. The wording was considerably
different from the section here under review. It
continued in virtually the same language in The
Consolidated Railway Act, 1879, 42 Vict., c. 9,
s. 37.
In The Indian Act, 1880, 43 Vict., c. 28, there
appeared section 31 which differed from section 37
of the 1879 Railway Act, as shown in the under
lined portions of the section set out hereunder:
31. If any railway, road or public work passes through or
causes injury to any reserve belonging to or in possession of any
band of Indians, or if any act occasioning damage to any
reserve be done under the authority of any Act of Parliament,
or of the Legislature of any Province, compensation shall be
made to them therefor in the same manner as is provided with
respect to the lands or rights of other persons; the Superinten-
dent-General shall, in any case in which an arbitration may be
had, name the arbitrator on behalf of the Indians, and shall act
for them on any matter relating to the settlement of such
compensation; and the amount awarded in any case shall be
paid to the Receiver-General for the use of the band of Indians
for whose benefit the reserve is held, and for the benefit of any
Indian having improvements thereon.
For the first time the Indians became entitled to
compensation not only when railways passed
through their reserve but when any "road or public
work" did so. As will be noted, provision was made
for the appointment of an arbitrator and for the
disposition of an award of compensation. Sections
36 and 37, it should be pointed out, provided for
the cases in which a release or surrender of Indian
lands was required before they could be sold,
alienated or leased. They were predecessor sections
to section 50 of the Indian Act, 1927, supra.
In the Revised Statutes of Canada, 1886 [c. 43],
section 31 became section 35 [of The Indian Act]
(virtually unchanged from the 1880 Act) and sec
tions 36 and 37 became sections 38 and 39. By an
amendment in 1886, the underlined words were
added to section 35 which became section 46 of the
Revised Statutes of Canada, 1906 [c. 81].
46. No portion of any reserve shall be taken for the purposes
of any railway, road or public work without the consent of the
Governor in Council, and, if any railway, road, or public work
passes through or causes injury to any reserve, or, if any act
occasioning damage to any reserve is done under the authority
of an Act of Parliament or of the legislature of any province,
compensation shall be made therefor to the Indians of the band
in the same manner as is provided with respect to the lands or
rights of other persons.
2. The Superintendent General shall, in any case in which an
arbitration is had, name the arbitrator on behalf of the Indians,
and shall act for them in any matter relating to the settlement
of such compensation.
3. The amount awarded in any case shall be paid to the
Minister of Finance for the use of the band of Indians for
whose benefit the reserve is held, and for the benefit of any
Indian who has improvements taken or injured.
Two things should be noted. First, the under
lined words are identical to those appearing in all
subsequent versions of the Act and in particular, in
the first three lines of section 48 of the Indian Act,
1927, although the balance of the section is sub
stantially different in that section. Second, subsec
tions (2) and (3) are identical with subsections (3)
and (4) of the 1927 Act.
Section 46 was repealed in 1911 and was
replaced by the following as it appeared in 1-2
Geo. V, c. 14, s. 1:
46. No portion of any reserve shall be taken for the purpose
of any railway, road, public work, or work designed for any
public utility without the consent of the Governor in Council,
but any company or municipal or local authority having statu
tory power, either Dominion or provincial, for taking or using
lands or any interest in lands without the consent of the owner
may, with the consent of the Governor in Council as aforesaid,
and subject to the terms and conditions imposed by such
consent, exercise such statutory power with respect to any
reserve or portion of a reserve; and in any such case compensa
tion shall be made therefor to the Indians of the band, and the
exercise of such power, and the taking of the lands or interest
therein and the determination and payment of the compensa
tion shall, unless otherwise provided by the order in council
evidencing the consent of the Governor in Council, be governed
by the requirements applicable to the like proceedings by such
company, municipal or local authority in ordinary cases.
There were several noteworthy changes:
(1) the words commencing with "but" in line 4
which are all new;
(2) the use of the word "but" rather than the
conjunction "and";
(3) the inclusion of the additional words, following
a semi-colon, "and in any such case compensation
shall be made therefor to the Indians of the band"
to the end of the section.
The significance of these changes are, as I see it,
the following:
(1) the use of the word "but" by the draftsman
was to distinguish the requirements for expropria
tion by a body, other than the Crown, having the
statutory power of compulsory taking, by import-
ing the procedures for expropriation applicable to
them by their constituent statutes, into the Indian
Act and, as well, by enabling terms and conditions
to be imposed by the Governor in Council in giving
his authority to such a body to expropriate reserve
lands. No such power of limitation was imposed in
the earlier words in the section. Since the only
body having the power of compulsory taking other
than a company, municipal or local authority
having such power to expropriate conferred on it
by either the Dominion or provincial Crown, was
the Crown in the right of Canada, the first three
lines of the subsection must relate to it;
(2) the latter part of the subsection dealing with
compensation, opening with the words "and in any
such case", obviously refer to the authorities
having the statutory power "for taking or using
lands ... without the consent of the owner".
In my view, this analysis of section, 46 assists
greatly in construing section 48 of the 1927 Act.
My observations respecting section 46 continue to
apply to the interpretation of section 48 because
the wording is, with the exception to which I will
hereunder refer, identical. Moreover, the relevance
of subsection (2) of section 48, supra, in that
interpretation is clarified. That subsection is in
precisely the same language as section 46 after the
words "and in any such case" with the deletion of
the conjunction "and". What happened was that
section 46 was simply divided into two subsections.
Since, as I see it, the words following "and in any
such case" in section 46 clearly applied only to
bodies having the statutory power to expropriate,
the same must be true after the section was
renumbered if a coherent construction of the sub
section is to be found.
My view that this is the correct interpretation to
be given subsection (1) of section 48 is reinforced
by noting that subsections (3) and (4) of that
section appeared in identical terms as subsections
(2) and (3) in the 1906 version of the Indian Act
and appear to have continued in such terms as
subsections (2) and (3) of section 46 of the 1911
amending Act because only subsection (1) was
repealed and substituted for in that Act. Since
those subsections apply "in any case in which an
arbitration is had", they would appear to apply to
those companies and authorities which have a
statutory power to expropriate and whose constitu
ent statutes provide for arbitration. I have not
found, nor were we referred to any section in the
1927 Indian Act, providing for arbitration. That
being so, it seems that two separate expropriating
procedures were contemplated by subsection (1) of
section 48, i.e., one where the federal Crown was
expropriating and the second where other statutory
powers were being exercised.
I am further of the view that, contrary to what
was submitted by counsel for the appellants, sec
tion 50, supra, does not require in all cases in
which the Crown is to be the transferee of Indian
reserve lands that a release or surrender to the
Crown be obtained from the Indians. Section 50
clearly applies to cases where reserve lands are to
be "sold, alienated or leased". As I see it, a release
or surrender by the Indians to the Crown must be
obtained if it is proposed to sell or lease such lands
to a third party. This enables the Crown to ensure
that its obligations to the Indians are protected.
That may be so, counsel agreed, but the use of the
word "alienated" would encompass an expropria
tion of reserve lands by the Crown.
I do not agree. In its context, the word "alienat-
ed" is neither used in its technical sense nor does it
apply on the facts of this case. In that sense
Armour C.J. in Meek v. Parsons et al. (1900), 31
O.R. 529 (Div. Ct.) quoting from Masters v.
Madison County Mutual Ins. Co. (1852), 11
Barb. 624 (N.Y. App. Div.), said [at page 533]:
The word, "alienate," has a technical legal meaning, and any
transfer of real estate, short of a conveyance of the title, is not
an alienation of the estate. No matter in what form the sale
may be made, unless the title is conveyed to the purchaser, the
"estate" is not alienated.
That being so, while it might have been argued
otherwise had the facts been different, in the cir
cumstances of this case, because of the opening
words of section 50, viz., "Except as in this Part
otherwise provided" an alienation (if an expropria
tion does create an alienation in the technical
sense) resulting from an expropriation pursuant to
section 48 (which is included "in this Part") was
excluded from the requirements of release or sur
render which might otherwise have prevailed. In
my opinion, therefore, compliance with section 50
is not required where reserve lands are expropriat
ed pursuant to section 48 of the Indian Act.
Counsel for the appellants found support for his
submissions in Point v. Dibblee Construction Co.
Ltd., et al., [1934] O.R. 142 (H.C.), at pages 151
and 152. The passage upon which he relied reads
as follows:
The legal title to the land set apart by treaty or otherwise for
the use or benefit of a particular band of Indians is in the
Crown. The tenure of the Indians is a personal and usufructu-
ary right, dependent upon the good will of the Sovereign. They
have no equitable estate in the lands: Attorney-General for
Quebec v. Attorney-General for Canada, [1921] 1 A.C. 401;
Reg. v. St. Catharines Milling and Lumber Co. (1885), 10
O.R. 196, affirmed (1886), 13 A.R. 148, (1887), 13 S.C.R.
577, (1889), 14 App. Cas. 46. For the history of the public
lands of Ontario and the Canadian policy upon Indian ques
tions, see the classic judgment of Boyd, C., in 10 OR., at p.
203, and the Report on the Affairs of the Indians in Canada
(1842) Appendix E.E.E. of the Journals of the Legislative
Assembly of the Province of Canada, vol. 4. The land compris
ing Cornwall Island is the property of His Majesty the King in
the right of the Dominion of Canada (The British North
America Act, 1867, 30 Vic., ch. 3 (Imp.), sec. 91(24); The
King v. Easterbrook, [1929] Ex. C.R. 28, affirmed [1931]
S.C.R. 210). And that is the reason why no release or surrender
by the Indians of any reserve or portion of a reserve to any
person other than His Majesty is valid (secs. 50 to 54). This
being so, how can the prerogative right of the Crown to deal
with its own property be fettered? No provision or enactment in
any Act shall affect, in any manner whatsoever, the rights of
His Majesty, his heirs or successors, unless it is expressly stated
therein that His Majesty shall be bound thereby (The Interpre
tation Act, R.S.C. 1927, ch. 1, sec. 16).
There is, in my reading of The Indian Act, R.S.C. 1927, ch.
98, no limitation upon this prerogative right. The provisions of
sec. 48, whereby no portion of any reserve shall be taken for the
purpose of any railway, road, public work, or work designed for
any public utility without the consent of the Governor in
Council, and the compulsory taking by any company or munic
ipal or local authority having the statutory power is regulated,
refer, obviously, to the case where land is taken away or
withdrawn from the reserve and the title to the land so taken
passes from the Crown to the company, municipal or local
authority concerned. [Emphasis added.]
Far from supporting the appellants' interpreta
tion of subsection 48(1) as I read the excerpt, it
appears to support that of the Trial Judge, which
as I have said earlier herein, is consonant with my
construction of the subsection.
For all of the foregoing reasons, I am of the
opinion that the appellants fail on the first ground
of their appeal.
2. Review of Expropriation
This issue, as defined by appellants' counsel is, if
section 48 of the Indian Act permitted the Crown
to expropriate reserve lands, was such jurisdiction
properly exercised in the case at bar? The thrust of
this argument is that the Court is entitled to
examine not only the expressed purpose for the
expropriation but the actual reason therefor. In
counsel's submission the dominant purpose for the
expropriations was not that expressed in either
Order in Council P.C. 3801 (to construct public
work, namely, an airport at Penticton) nor in P.C.
9696 (to further develop the Penticton airport as a
public work), but rather for the beneficiaries of a
fiduciary relationship (the Penticton Indian Band)
to deliver up Parcels A and B at prices which
suited the fiduciary notwithstanding that they
were not satisfactory to the beneficiaries. Counsel
argued in his memorandum that "had it been
necessary to expropriate land for the establishment
of an airport, the Crown could have exercised its
powers against non-Indian land on the river bank
opposite the relevant Indian lands. The price which
would have had to be paid for such alternate land,
however, would have been higher than that at
which the Crown hoped to obtain the reserve
lands." Such motivation, he said, fails to satisfy
the "dominant purpose" test thus entitling this
Court to review the exercise of the Crown's juris
diction, if any, to expropriate reserve lands. The
test upon which he relied he found in the decision
of the Nova Scotia Supreme Court Trial Division
in Warne v. The Province of Nova Scotia, Aker-
ley, Jamerson, Henry and Kinsman (1970), 1
N.S.R. (2d) 150, at pages 152-153.
Before reviewing that authority, it should be
said that there is neither any direct nor indirect
evidence which I have found disclosed in the
record which might attribute to the Crown the
motive for the expropriation suggested by the
appellants. At its very highest the record is replete
with evidence that when the Department of Trans
port concluded that it could no longer hope to
negotiate with the Indian Affairs Branch valua
tions for Parcels A and B which it could justify
and, given the urgency, in the case of Parcel B, for
enlarging the runways at the airport for defence
purposes, it decided the only course open to it was
to expropriate the lands. It is a very long step,
indeed, to proceed from that factual situation to
one which ascribes to the respondent the motive
that the Departmental officials deliberately
acquired the Indian lands in preference to those of
non-Indians because they could be acquired at
lower prices. As I have said I could find no evi
dence to support such a contention. In fact, there
is substantial evidence that the lands were desired
because they were the most suitable for the pur
poses for which they were required.
I turn now to the Warne case. The key passage
in that decision, as I appreciate it, is the passage
which appears at page 152 of the report where
Cowan C.J.T.D., after reviewing cases examining
the power of a court to inquire into the exercise by
a Minister of his statutory power to expropriate,
said:
In my opinion, however, the exercise of the discretion
referred to in the foregoing cases was one which was for a
purpose contemplated by the statute under consideration. If the
predominant purpose of the expropriation is in furtherance of a
tortious conspiracy to injure the owner of the land taken, the
action of the Minister is, in my opinion, subject to review by the
Court.
Here I have been unable to find the slightest
evidence that the "predominant purpose" of the
expropriation was in furtherance of a "tortious
conspiracy to injure the owner of the land".
Undoubtedly the Department of Transport, having
been unable to negotiate what they deemed to be
suitable prices for the lands, obtained authoriza
tion to expropriate. That had the effect of limiting
the options available to the Indians in that they
were unable then to elect not to sell or lease their
lands. All they could do was negotiate the compen-
sation. However, that is a far cry from attributing
to the Department the predominant purpose
attributed to it by the appellants.
Since that was the only test of the five pro
pounded in the Warne case which was relied upon
by the appellants, it is unnecessary to further
examine the applicability of that case. The second
ground of appeal in my view, therefore fails.
3. Breach of Fiduciary Duty
The appellants' attack on the basis that the
respondent was in breach of Her fiduciary duty to
the Penticton Band, was three-pronged:
(a) Although the relationship between the Band
and the respondent was that of a fiduciary requir
ing Her to deal with lands occupied by Indians for
their benefit rather than that of a trustee and
cestui que trust, the rules applicable to conflicts of
interest of trustees are, it was said, equally appli
cable to fiduciaries. Therefore, since a trustee is
liable for breach of trust if he deals with property
for his own interest in preference to that of his
cestui que trust, so will a fiduciary be liable to
those for whom he is responsible in the fiduciary
relationship, in this case the Indians of the Pentic-
ton Band;
(b) The respondent failed to exercise the degree of
care expected of a fiduciary when Her officials
failed to consider the peculiar value and impor
tance of Parcels A and B to the Band and its
locatees in determining the compensation payable
to them;
(c) The Crown in failing to ensure that the Indians
of the Penticton Band were fully informed of the
opinion acquired by the Crown relating to the
inability of the Crown to expropriate reserve lands
and that they may be acquired only after a surren
der by the Indians, was in breach of its fiduciary
duty of full disclosure.
Before dealing with these attacks it should be
pointed out that the Trial Division decision, which
was delivered on July 9, 1981, was rendered before
the judgment of the Supreme Court of Canada in
Guerin et al. v. The Queen et al. (judgment ren
dered November 1, 1984, [1984] 2 S.C.R. 335).
That judgment will be referred to hereinafter as
the Guerin case. To appreciate its significance in
the context of the three attacks above referred to,
the decision should be reviewed in some depth.
The headnote sufficiently sets forth the facts as
follows [at page 335]:
An Indian Band surrendered valuable surplus reserve lands
to the Crown for lease to a golf club. The terms obtained by the
Crown, however, were much less favourable than those
approved by the Band at the surrender meeting. The surrender
document did not refer to the lease or disclose the terms
approved by the Band. The Indian Affairs Branch officials did
not return to the Band for its approval of the revised terms.
Indeed, they withheld pertinent information from both the
Band and an appraiser assessing the adequacy of the proposed
rent. The trial judge found the Crown in breach of trust in
entering the lease and awarded damages as of the date of the
trial on the basis of the loss of income which might reasonably
have been anticipated from other possible uses of the land. The
Federal Court of Appeal set aside that judgment and dismissed
a cross-appeal seeking more damages.
At pages 375-376 of the reasons of Dickson J.
(as he then was), speaking for himself and Beetz,
Chouinard and Lamer JJ. (all other members of
the Court concurred in the result) had this to say
of the Crown's obligations to the Indians:
... it is my view that the Crown's obligations vis-Ã -vis the
Indians cannot be defined as a trust. That does not, however,
mean that the Crown owes no enforceable duty to the Indians
in the way in which it deals with Indian land.
In my view, the nature of Indian title and the framework of
the statutory scheme established for disposing of Indian land
places upon the Crown an equitable obligation, enforceable by
the courts, to deal with the land for the benefit of the Indians.
This obligation does not amount to a trust in the private law
sense. It is rather a fiduciary duty. If, however, the Crown
breaches this fiduciary duty it will be liable to the Indians in
the same way and to the same extent as if such a trust were in
effect.
The fiduciary relationship between the Crown and the Indi-
ans has its roots in the concept of aboriginal, native or Indian
title. The fact that Indian bands have a certain interest in lands
does not, however, in itself give rise to a fiduciary relationship
between the Indians and the Crown. The conclusion that the
Crown is a fiduciary depends upon the further proposition that
the Indian interest in the land is inalienable except upon
surrender to the Crown.
An Indian Band is prohibited from directly transferring its
interest to a third party. Any sale or lease of land can only be
carried out after a surrender has taken place, with the Crown
then acting on the Band's behalf. The Crown first took this
responsibility upon itself in the Royal Proclamation of 1763. It
is still recognized in the surrender provisions of the Indian Act.
The surrender requirement, and the responsibility it entails, are
the source of a distinct fiduciary obligation owed by the Crown
to the Indians. [Emphasis added.]
Mr. Justice Dickson then discussed the nature of
Indian title to reserve lands and concluded that
either characterizing it as a beneficial interest of
some sort or a personal, usufructary right was not
quite accurate. Rather he said at page 382:
Indians have a legal right to occupy and possess certain
lands, the ultimate title to which is in the Crown. While their
interest does not, strictly speaking, amount to beneficial owner
ship, neither is its nature completely exhausted by the concept
of a personal right. It is true that the sui generis interest which
the Indians have in the land is personal in the sense that it
cannot be transferred to a grantee, but it is also true, as will
presently appear, that the interest gives rise upon surrender to a
distinctive fiduciary obligation on the part of the Crown to deal
with the land for the benefit of the surrendering Indians. These
two aspects of Indian title go together, since the Crown's
original purpose in declaring the Indians' interest to be inalien
able otherwise than to the Crown was to facilitate the Crown's
ability to represent the Indians in dealings with third parties.
The nature of the Indians' interest is therefore best character
ized by its general inalienability, coupled with the fact that the
Crown is under an obligation to deal with the land on the
Indians' behalf when the interest is surrendered. Any descrip
tion of Indian title which goes beyond these two features is both
unnecessary and potentially misleading. [Emphasis added.]
It should be noted that in the above passages
from his judgment, Dickson J. says that "The
surrender requirement ... [is] the source of a
distinct fiduciary obligation", that the interest of
the Indians "gives rise upon surrender to a distinc
tive fiduciary obligation" and that "the Crown is
under an obligation to deal with the land on the
Indians' behalf when the interest is surrendered"
(emphasis added). At page 383 he stated "In the
present appeal its [the fiduciary obligation] rele
vance is based on the requirement of a "surrender"
before Indian land can be alienated" (emphasis
added). Lastly, at page 385, Mr. Justice Dickson
said, "When, as here, an Indian Band surrenders
its interest to the Crown, a fiduciary obligation
takes hold to regulate the manner in which the
Crown exercises its discretion in dealing with the
land on the Indians' behalf" (emphasis added).
From the foregoing, it is clear that what was
said by Dickson J., in the Guerin case was related
to a fiduciary relationship in the context of that
case, i.e., where there was a surrender of Indian
lands to the Crown on certain terms, which terms
were changed by the Crown without consultation
with or approval by the Indians. That is not the
factual situation in the case at bar. Nevertheless,
for the purposes of this appeal I am prepared to
accept that the principle propounded by Dickson
J., applies. When the Crown expropriated reserve
lands, being Parcels A and B, there would appear
to have been created the same kind of fiduciary
obligation, vis-Ã -vis the Indians, as would have
been created if their lands had been surrendered.
The precise obligation in this case was to ensure
that the Indians were properly compensated for
the loss of their lands as part of the obligation to
deal with the land for the benefit of the Indians,
just as in the Guerin case, the obligation was to
ensure that the terms of the lease were those
agreed to by the Indians as part of the general
obligation to them to ensure that the surrendered
lands be dealt with for their use and benefit. How
they ensured that lies within the Crown's discre
tion as a fiduciary and so long as the discretion is
exercised honestly, prudently and for the benefit of
the Indians there can be no breach of duty.
Before dealing with the attacks based on the
alleged breach of fiduciary duty, it should be
observed that there was virtually no viva voce
evidence adduced to support the allegations of
breach of duty. Of two witnesses called by the
appellants at trial for the purpose of proving the
allegations, only one, Louise Gabriel, was old
enough to have participated in any of the Band
meetings concerning the taking of the airport
lands. While she was old enough to have par
ticipated, she, as a woman, was not entitled to
attend Band meetings nor to vote on questions
there raised. That situation did not change until
the late 1940's after the relevant events in this case
had occurred. Neither was she a locatee on either
Parcel A or B, although her husband had an
interest in an estate, part of the property of which
was in Parcel A. She could only testify that the
expropriation disrupted Band life in many ways.
The second witness in respect of this issue,
Morris Kruger, is one of the appellants herein and
is the present Chief of the Band, was born in the
early 1940's and, thus, has no memory of any of
the events surrounding the expropriation.
None of the locatees alive at the time of trial, if
any, were called as witnesses. The Indian Agent,
Mr. Barber was then dead so that the allegations
must be established through the documentary
evidence.
I turn now to the attacks based on the alleged
breach of fiduciary duty.
(a) Assuming, without deciding, that the rules
applying to conflicts of interest between trustees
and their cestuis que trust apply to fiduciaries,
what was found by the learned Trial Judge is most
pertinent. At page 519 of his reasons:
The plaintiffs, at trial, expressly abandoned reliance on all
pleadings alleging fraudulent conduct.
Among the terms of the trust is s-s. 48(1) of the Indian Act.
Parliament cannot have intended that the Governor in Council
consider only the best interests of the band concerned in
deciding whether or not to consent to an expropriation of
reserve lands. It is rarely in the best interests of an occupant to
be dispossessed or of an owner to be deprived of his property
against his will. Certainly, here, it was not in the best interests
of the Band.
The defendant's duty to the Band, as trustee, was by no
means the only duty to be taken into account. The evidence is
clear that those officials responsible for the administration of
the Indian Act urged a lease while those responsible for the
airport ultimately urged expropriation. The Governor in Coun
cil was entitled to decide on the latter. There was no breach of
trust in doing so.
The defendant, as trustee, had also the obligation to obtain
proper compensation for the Band. Since the time has long
since passed that the compensation paid and accepted could be
reviewed in Court, there is little to be said on the subject.
I agree with these findings. There was no breach
of the fiduciary obligation of the Crown based on
the alleged conflict existing between two of its
Departments—Mines and Resources, Indian
Affairs Branch, and Transport. In fact, the record
contains many letters involving particularly the
Indian Agent and his superior, the Indian Com
missioner for British Columbia, which revealed
that they were articulate, forceful and passionate
spokesmen for the Penticton Indians. Their supe
rior in Ottawa, the Secretary of the Indian Affairs
Branch, also was a strong advocate in advancing
the views of the Indians as to the proper compen
sation payable as a matter of rent, as a purchase
price for the property or for the expropriation
thereof. Their views did, in fact, influence those of
the senior officials in the Department of Transport
with whom they dealt since their original offers of
compensation for the expropriation were increased
because of the representations. In fact, the sum of
$15,000 was substantially closer to the independ
ent evaluation obtained by the appellants than to
those obtained by the respondent. Moreover, as the
Trial Judge pointed out, the Transport officials,
too, owed a duty in the performance of their
functions, not a direct duty to the Indians but a
duty owed to the people of Canada as a whole,
including the Indians, not to improvidently expend
their moneys. Ultimately a decision had to be
taken which, unfortunately, may not have been
wholly in accord with the view of the Indians as to
the worth of their lands to them although, as
earlier pointed out, the settlement figure was one
which was originally suggested by them. (See
letter from Barber dated January 9, 1946.) That
fact does not mean that there was a breach of
fiduciary duty nor that there was a conflict of
interest which had to be resolved in their favour,
disregarding the obligations of the Department of
Transport officials. To summarize, I do not under
stand how it could be said that there was a conflict
of duty precluding the Indian Affairs Branch from
settling the compensation at a figure which was
not wholly satisfactory to the Indian Band when
all of the circumstances relating to the transac
tions were taken into account.
(b) With respect to the second attack, supra, there
is no doubt in my mind that the Indian Affairs
officials were fully cognizant of the "peculiar
value and importance" of Parcels A and B to the
Indians.
His Lordship made reference to certain corre
spondence which demonstrated that the Indian
Affairs officials were aware of the importance of
Parcels A and B to the Band and that this had
been communicated in a forceful manner to the
Deputy Minister of Transport.
In summary, then, without reviewing all of the
evidence in detail, a fair reading of the record
indicates that officials at all levels were well aware
of their respective obligations and discharged them
to the best of their abilities. Valid criticism might
be directed to the inordinate length of time
required to make payment of the compensation but
I do not conceive that to be a breach of duty
sufficient to invalidate the expropriation.
(c) With respect to the alleged failure of the
Indian Affairs officials to disclose to the Band the
opinion of the Deputy Minister of Justice that
Parcel B could not be expropriated, the Trial
Judge found as follows [at pages 519-520]:
I accept that the present plaintiffs were not aware of that
opinion until the research leading to the bringing of this action
disclosed it but the evidence does not satisfy me that those at
the meeting were not informed. In reporting on the meeting,
the Indian agent, Alfred H. Barber, who died in 1960, wrote,
ex. P-49, as follows:
I would advise that this meeting was a very difficult one and
I have not the least doubt but that, if all members of the
Band had been present, or should the surrender be resubmit
ted to the Band, it will be defeated.
The Indians do not understand just why they are required to
surrender these parcels of land when the land has been taken
from them for the past three years and they have been
repeatedly told that the land had been expropriated by the
Government. Also they point out very forcibly that there was
no surrender submitted to them for the land taken previously.
It will be realized that I was in an unfortunate position in
having to ask them to agree to allow the Department to sell
this land when I have for the past three years been telling
them that the land was expropriated, and that there was no
possibility of the land being returned to them.
That is open to a number of interpretations but, on all the
evidence, Barber's consistent sympathy for the position of the
Band and his outspoken advocacy of its interests is so apparent
that I cannot conceive that he withheld any information from
the meeting, provided he had that information himself. It is not
clear that he knew of the opinion but, on the evidence, I must
hold that the onus of proving the information was withheld has
not been discharged.
I can only say that, in my opinion, the finding
was a reasonable inference to be drawn from the
known facts. Unfortunately, it was simply not
possible for viva voce evidence to be adduced by
Mr. Barber, who is now deceased, or from any of
the Indians who were actually present at the "sur-
render" meeting. The best evidence is from the
Barber report referred to in the above excerpt in
the reasons of the Trial Judge, written shortly
after the meeting (the report was dated
February 4, 1946). Having read and re-read Mr.
Barber's many reports and his quite apparent
understanding of and sympathy for the Indians, I
can only conclude that he would have disclosed
everything of which he was aware in respect of the
requirement of a surrender. The letter from the
Director of Indian Affairs, dated January 18, 1946
instructing Mr. Barber to call a meeting of the
Band for the purpose of considering a surrender
refers to a telegram which is not part of the record.
I can only assume that in order for him intelligent
ly to discuss the necessity for the surrender, he
would have been advised of the basis for the
requirement. And, of course, as pointed out by the
learned Trial Judge, the onus for proving the
alleged lack of communication of the existence of
the opinion, where, on a fair appraisal of the
evidence, a prima facie case had been made out,
that it had been, must lie with those who allege it.
They have failed to discharge that onus.
Even if this were not so, since the property had
already been expropriated on February 17, 1944,
and since, as I have found, the expropriation of
reserve lands was a valid one pursuant to section
48 of the Indian Act, 1927, the surrender was both
superfluous and a nullity. I agree with the Trial
Judge in so concluding.
Therefore, in my view, the appellants have failed
in all three of their attacks alleging a breach of
fiduciary duty.
Before leaving this branch of the appeal I should
return to the appellants' basic criticism of the
conduct of the Crown in its dealings with the
reserve lands to which I adverted at the beginning
of this opinion, i.e., that by resorting to expropria
tion, the Indians were effectively deprived of their
options to refuse to sell, or to negotiate suitable
lease terms or sale prices. The options remaining
open to them were, it was said, to settle the
compensation at a figure which might not be in
accord with the value of the lands to them or to
resort to resolution of the question of compensa
tion in the Exchequer Court. It is clear from the
record that the Indians understood, both from the
Indian Agent and their independent legal advisors,
that court action could not only be costly but also
could result in further delay in receipt of the
compensation. There is no question that from the
expropriations those consequences did flow.
However, from the perspective of the Crown in
its Department of Transport incarnation, there
were competing considerations. First: initially the
requirement for an enlarged aerodrome as an
emergency landing site for commercial aircraft, in
a mountainous region where such sites were
scarce, was important. Second: later on the more
urgent requirement for an even larger aerodrome
for western defence purposes in wartime was of at
least equal importance.
From these considerations and facts, the ques
tion which must be posed is, did the fact that the
competing considerations were resolved in respect
of both Parcels A and B, with the concurrence of
the Indians, on terms which clearly were compro
mises, not entirely satisfactory to either of the
branches of the Crown involved, result in a breach
of the Crown's fiduciary duty to the Indians enti
tling them to the remedies sought in this action? I
think not for the reasons which I have already
given and for those which follow.
In essence, however unhappy they were with the
payments made, they accepted them. The pay
ments were for sums which could be substantiated
by the independent valuations received by both
parties and which were determined after extensive
negotiations and foreceful representations on the
Indians' behalf by the Indian Agent and other high
officials of the Indian Affairs Branch. If the sub
missions advanced by the appellants were to pre
vail, the only way that the Crown could successful
ly escape a charge of breach of fiduciary duty in
such circumstances would have been, in each case,
to have acceded in full to their demands or to
withdraw from the transactions entirely. The com
peting obligations on the Crown could not permit
such a result. The Crown was in the position that
it was obliged to ensure that the best interests of
all for whom its officials had responsibility were
protected. The Governor in Council became the
final arbiter. In the final analysis, however, if the
appellants were so dissatisfied with the expropria
tions and the Crown's offers, they could have
utilized the Exchequer Court to determine the
issues. For whatever reasons, they elected not to
make these choices. They accepted the Crown's
offers and, at least in the case of Parcel B, the
offer was at the figure which they had suggested. I
fail to see, then, how they could now successfully
attack, after so many years, the settlements to
which they agreed.
IV
THE LIMITATION ACT AND LACHES
Since I have concluded that none of the attacks
on the impugned judgment can succeed, it is,
strictly speaking, unnecessary to deal with the
Crown's contention that the Band's claim is barred
by section 38 of the Federal Court Actio and the
6 38. (1) Except as expressly provided by any other Act, the
laws relating to prescription and the limitation of actions in
force in any province between subject and subject apply to any
proceedings in the Court in respect of any cause of action
arising in such province, and a proceeding in the Court in
respect of a cause of action arising otherwise than in a province
shall be taken within and not after six years after the cause of
action arose.
(2) Except as expressly provided by any other Act, the laws
relating to prescription and the limitation of actions referred to
in subsection (1) apply to any proceedings brought by or
against the Crown.
Limitation Act, R.S.B.C. 1979, c. 236, subs. 3(4), 7
because more than six years had elapsed between
the date upon which the cause of action arose and
March 23, 1979, the date upon which the action
was commenced. Nevertheless, I will deal briefly
with the submissions which may become important
should I be found to have been in error on any of
the substantive issues.
The Crown conceded that no limitation provi
sion will apply where there has been a fraudulent
concealment of the existence of the cause of action
until the expiry of the prescription period when,
with reasonable diligence, the plaintiffs could have
discovered it had there not been such a conceal
ment. Here, however, on the hearing of the appeal,
appellants' counsel advised the Court that, at trial,
the plea of fraudulent concealment had been
abandoned.
However, relying on the Guerin case as his
authority, counsel for the appellants argued that
the breach of duty arising from the failure to
disclose the opinion of the Deputy Minister of
Justice constituted an equitable fraud. It was, to
employ the words quoted in Guerin by Dickson J.,
at page 390 of his reasons for judgment, from the
Kitchen case [Kitchen v. Royal Air Force Asso
ciation, [1958] 1 W.L.R. 563 (C.A.)], "conduct
which, having regard to some special relationship
between the two parties concerned, is an uncons
cionable thing for the one to do towards the
other".
I do not think that the conduct of the Crown in
this case amounted to equitable fraud. As earlier
held, I do not believe that the existence of the legal
opinion was withheld from Mr. Barber, nor did he,
in turn, withhold disclosure of its existence from
the Band either inadvertently or deliberately.
It would have been conduct which was com
pletely out of character both for Mr. Barber and
'3....
(4) Any other action not specifically provided for in this Act
or any other Act shall not be brought after the expiration of 6
years after the date on which the right to do so arose.
for those to whom he reported, to do so. The
record discloses many, many instances of the com
plete candidness exhibited by these Indian Affairs
officials with the Indians throughout the years so
that it would be indeed a reversal of an established
pattern of conduct for them to have withheld
pertinent information at the time when the expro
priation of Parcel B was so near completion. That
being so I am quite unable to find any conduct by
the Indian Affairs Branch officials which was so
clearly unconscionable as to amount to equitable
fraud.
In addition, it is important to note that there is
considerable documentary evidence in the record
which discloses that, well before the Crown's legal
opinion became known, at least some of the Band,
including probably all of the locatees, had
obtained advice from independent legal counsel as
to their rights. It is inconceivable to me that any
such counsel would have failed to consider the
legality of the expropriation of the reserve lands
even had he been consulted initially only with
respect to the quantum of compensation desired. If
he did that then he would obviously have had to
consider the possibility that only a properly-
executed surrender would suffice. If such is the
case the Indians were not taken by surprise by the
disclosure in early 1946, that a surrender was
required by the Crown to effectuate the transfer of
the lands. If that is correct, the action in the
Exchequer Court which was clearly within the
contemplation of both the Indian locatees and the
Indian Affairs Branch officials could have, and
perhaps ought to have, been proceeded with.
Instead, the Indians, however reluctantly, chose to
settle. Then, some thirty-three years later, they
sought to set aside the settlement alleging equita
ble fraud as the basis for the inapplicability of the
Limitation Act. As I have said, I do not believe
there was either actual or equitable fraud in the
circumstances of this case. Therefore, since the
action was not brought within the time limited by
the applicable statute, it could have been dismissed
on that ground.
In the circumstances, the question of laches
need not be dealt with.
V
DAMAGES
Counsel for the appellants advance, in his
memorandum of fact and law, a number of argu-
ments based on the notion that the measure of
damages to be applied in the assessment thereof in
this case, would assist the Court in deciding the
substantive issues. Since I do not agree with any of
those submissions, and in view of the fact that the
appeal is to be dismissed so that damages need not
be assessed, it is unnecessary to discuss the argu
ments under this head.
VI
CONCLUSION
The appellants having failed to satisfy me that
the learned Trial Judge erred in any material way
in the judgment appealed from, I would dismiss
the appeal with costs.
* * *
EDITOR'S NOTE
Stone J. concurred with the disposition and
reasons of Urie J.
With respect to the compensation for Parcel B,
the question was whether Indian Affairs had acted
properly in making the $15,000 settlement rather
than litigating.
The doctrine of fiduciary duty recently enunciat
ed by the Supreme Court of Canada in the Guerin
case will require elaboration and refinement on a
case-by-case basis. That case was, however,
applicable to the case at bar even though the
circumstances were quite different. Nothing in the
judgment of Dickson J. in Guerin prevented refer
ence to the law of trustees for guidance in decid
ing whether Indian Affairs had discharged its
fiduciary duty in accepting the settlement. It had
acted prudently in view of the following facts: (1)
the valuations ranged from as low as $6,800 up to
$16,958; (2) litigating involves legal costs; (3)
litigating involves delays; (4) the outcome of litiga
tion is uncertain.
As said by Wynn—Parry J. in Buttle v. Saunders,
[1950] 2 All E.R. 193 (Ch. D.), at page 195,
although trustees have a duty to obtain the best
price they can for their beneficiaries, it does not
follow that "the mere production of an increased
offer at any stage, however late in the negotia
tions, should throw on the trustees a duty to
accept the higher offer and resile from the exist
ing offer". They could properly act upon the
proverb "a bird in the hand is worth two in the
bush". A net award exceeding the settlement
figure was not even a probability let alone a
certainty.
Stone J. preferred not to comment on the limi
tation and laches issues as it was unnecessary to
do so.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.