Date: 20151015
Docket: T-1784-12
Citation:
2015 FC 1149
Ottawa, Ontario, October 15, 2015
PRESENT: The Honourable Mr. Justice Zinn
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PROPOSED
CLASS PROCEEDING
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BETWEEN:
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CHIEF EUGENE
HORSEMAN
AND THE HORSE
LAKE FIRST NATION
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Plaintiffs
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and
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HER MAJESTY THE
QUEEN
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Defendant
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AMENDED ORDER AND REASONS
[1]
The plaintiffs seek to certify this action as a
class proceeding pursuant to Part 5.1 of the Federal Courts Rules,
SOR/98-106. Rule 334.16 sets out several factors that must be met if an action
is to be certified.
[2]
For the reasons that follow, the plaintiffs have
not satisfied the Court that they meet all of these mandatory factors, and
accordingly, this action cannot be certified as a class action.
[3]
Between 1871 and 1921, Canada negotiated 11
separate treaties [the Numbered Treaties] with various First Nations. These
treaties encompass all of Alberta, Saskatchewan and Manitoba, portions of
British Columbia, Yukon, Northwest Territories, and Ontario. The treaties
provided Canada with large tracts of land in exchange for promises Canada made
to the First Nations. After the Numbered Treaties were entered into, other
Bands adhered to them. The most recent adhesion was made by the McLeod Lake
First Nation which adhered to Treaty 8 in 2000. Henceforth, I will refer to all
of the First Nations signatories to the Numbered Treaties as the “Treaty Bands.”
[4]
In each of the Numbered Treaties, Canada agreed
to pay an annual annuity to each member of the Treaty Band, and in many cases
an additional or greater annuity to the Chiefs and Headsmen [the Annuity
Payments]. Attached as Appendix A are the relevant provisions of the Numbered
Treaties regarding these Annuity Payments.
[5]
The amount of the Annuity Payments in Treaties 1
and 2 was increased in 1875 from $3 per person to $5, and an additional
allowance was to be paid to the Chiefs and Headsmen. Other than these
adjustments, the plaintiffs allege that Canada has never adjusted the amount of
the Annuity Payments in any of the Numbered Treaties and, as a consequence, they
say that “the Annuity Payments have been reduced in
value to the point that they no longer contribute to the welfare of the
individual recipients.”
[6]
The plaintiffs claim that the provisions in the
Numbered Treaties that provide for the Annuity Payments entitle the recipient
to an amount that is to be annually adjusted to reflect inflation and changes
in purchasing power, in order to maintain a value equivalent to its buying
power at the time the treaty was made. They claim that Canada is in breach of
its obligations under the Numbered Treaties and its fiduciary duties and seek
damages and “equitable compensation” for all
members of the class “in an amount equal to the present
value of losses sustained by the individual beneficiaries” as a result
of Canada’s failure to adjust the Annuity Payments over time.
[7]
Although the claim made for each individual
member of the proposed class may be a small amount, Canada filed an expert’s
report that estimates that, if the plaintiffs succeed in this class action,
Canada’s liability with respect to past Annuity Payments would be between one
and two billion dollars. As was observed at the hearing, the amount of
potential liability has no relevance to whether this action may be certified.
[8]
The proposed representative plaintiffs are Chief
Eugene Horseman [the Chief] and the Horse Lake First Nation [the HLFN].
The Chief is a member of the HLFN which is the successor of the Beaver Indians
of Dunvegan, one of the signatories to Treaty 8. The Chief is entitled to
receive an Annuity Payment under the terms of that treaty.
[9]
The plaintiffs are proposing that the class be
defined as: “All persons entitled to receive Annuity
Payments under the terms of each of the Numbered Treaties.”
[10]
The plaintiffs propose the following as the
common issues if this action is certified as a class proceeding:
a. Does each of the Annuity Provisions under the Numbered Treaties,
properly construed, provide for the right to receive an Annuity Payment that is
adjusted annually to account for inflation and changes in purchasing power, in
order to maintain a value equivalent to its buying power at the time each of
the Numbered Treaties was made?
b. Does Her Majesty the Queen in Right of Canada, by her agent the
Minister of Aboriginal Affairs and Northern Development, owe a fiduciary duty
to the Class in the administration of Annuity Payments under the Numbered
Treaties to adjust the amount of Annuity Payments to account for changes in
inflation and to preserve purchasing power, in order to maintain a value equivalent
to the Annuity Payments’ buying power at the time the Treaty was made?
c. Is the Crown in an ongoing breach of its treaty obligations by
providing Annuity Payments that are not adjusted for inflation and for changes
in purchasing power?
d. Should the Class be awarded damages and equitable compensation
as a result of the Defendant’s failure to adjust the Annuity Payments to
account for changes in inflation and purchasing power and, if so, what is the
methodology to be used to determine the amount?
[11]
Prior to launching this action, the HLFN filed a
claim with the Specific Claims Branch of the Department of Indian and Northern
Affairs, asserting that the Annuity Payments owing pursuant to Treaty 8 had to
be adjusted to reflect changes in purchasing power – the very claim advanced in
this action. The Specific Claims Branch responded on December 7, 2011, saying
that the claim could not be processed because it alleged a loss to individual
members of the HLFN and not a loss to the HLFN itself:
After careful review, it has been determined
that the claim submission will not be further assessed under the Specific
Claims Policy (the Policy), as set out in The Specific Claims Policy and
Process Guide. Allegations pertaining to the failure of the Crown to
provide treaty annuities to individuals, if proven, would give rise to a
personal loss to those individuals. In order to be assessed under the Policy,
a claim must be submitted by a First Nation suffering a loss from the alleged
grievance. Consequently, your claim submission has not been filed with the
Minister and will not proceed in the specific claims process…
[12]
Subsequent to hearing the submissions of the
parties on this motion for certification, the parties advised the Court of a
recent decision of the Specific Claims Tribunal in Beardy’s & Okemasis
Band #96 and 97 v Her Majesty the Queen in Right of Canada, 2015 SCTC 3 [Beardy’s].
The decision involved a claim arising out of Canada’s non-payment of Treaty 6 annuity
payments between 1885 and 1888, in the wake of the North-West Rebellion.
Canada submitted that the tribunal had no jurisdiction over the claim because
the annuity claims were individual in nature and not a right of the collective.
[13]
The tribunal held at paras 314-317 that it did
have jurisdiction because the failure to pay the annuity was a loss to the
collective:
Treaty 6 provides for annual payments to all
future generations of members of the collective. This could not be a promise
to the unborn. They do not exist, at least in the corporeal sense. It is a
promise to the collective comprised of the members, collectively, as it is constituted
at every moment in time
The entitlement to the payment ceases when a
member of the collective is removed from the band list. While an individual
who is no longer on the band list may remain a de facto member of the
community, he or she would no longer be recognized by the government as a
member of the band constituted under the Indian Act, 1880. Under the system of
administration and governance imposed on indigenous peoples by the Indian Act,
1880, the entitlement of the individual to the annual payment is lost, as it is
not owed to the individual but to the collective as then constituted.
The annual payment sustains the collective
by providing cash, meagre as it is, to each member. This is the intent of the
provision for the annual payment required by Treaty 6 as partial consideration
for the cession of a collective interest in the land. The failure to pay the
required money to an entitled individual is a loss to the collective.
The Claimant, a band under the Indian Act,
1880, and a First Nation within the definition of the term in the SCTA,
is the present incarnation of the collective that suffered the loss between
1885 and 1889. The loss between 1885 and 1889 is “its” loss within the meaning
of the SCTA, section 14(1).
[14]
The parties provided written submissions on the
impact, if any, of Beardy’s on this motion. They addressed whether, in
light of Beardy’s, the specific claims process would be a
preferable procedure for adjudicating the claims herein advanced and also
whether Beardy’s provides guidance on the issue of standing.
[15]
Beardy’s is not
binding on this Court and it is noted that even the tribunal saw the Annuity
Payments issue to have both an individual and a collective aspect. For these
reasons, I find that Beardy’s is unhelpful when considering the issue of
standing. It may, however, be relevant to the question of the preferred
procedure for advancing this claim.
[16]
The five requirements for certification of an
action as a class proceeding are set out in Rule 334.16, reproduced in Appendix
B. Those requirements are as follow:
1.
The pleading must disclose a reasonable cause of
action;
2.
There must be an identifiable class of two or
more persons;
3.
The claims of the class must raise common
questions of law or fact;
4.
A class proceeding must be the preferable
procedure for the just and efficient resolution of the common questions of law
or fact; and
5.
There must be a representative plaintiff who
i.
would fairly and adequately represent the
interests of the class;
ii.
has prepared a plan for the proceeding that sets
out a workable method of advancing the action and notifying the members of its
progress;
iii.
does not have an interest in conflict with the
other class members regarding the common questions of law and fact; and
iv.
has provided a summary of the agreement with
legal counsel respecting fees and disbursements.
[17]
Canada submits that the motion for certification
fails to meet all of these requirements except the second: Canada agrees that
there is an identifiable class.
Analysis
A.
Do the pleadings disclose a reasonable cause
of action?
[18]
The plaintiffs plead two causes of action:
Canada’s alleged breach of treaty obligations and its alleged breach of
fiduciary duty.
[19]
Canada submits that there are three reasons why
the pleading does not disclose a reasonable cause of action.
[20]
First, Canada submits that the claims advanced
by the plaintiffs are based on collective and not individual rights. It says
that a representative action is used where there are common or collective
rights at issue; whereas a class proceeding is used where there are individual
rights at issue. There being no individual rights at issue, it says that the
claim cannot succeed as drafted. Canada argued this as a preliminary issue of
standing; however, for the reasons that follow, this submission is more
appropriately considered when examining whether the claim advances a reasonable
cause of action.
[21]
Second, Canada submits that the plaintiffs’
claims are bound to fail “because there is no air of
reality to the causes of action alleged.”
[22]
Third, Canada submits that “the Statement of Claim does not disclose a cause of action
for breach of fiduciary duty or a sustainable claim for ongoing breach of
treaty obligations.”
[23]
The plaintiffs note that there is a very low
threshold they must meet to satisfy the Court that their pleading discloses a
reasonable cause of action. In Le Corre v Canada (Attorney General),
2004 FC 155 paras 21-23, aff’d 2005 FCA 127, this Court held that the test to
be met is the same as that applied to striking a pleading: Is it plain and
obvious that the plaintiff cannot succeed and that the action is doomed to
failure? The jurisprudence tells us that the plaintiffs need not pass a
preliminary merits test requiring an examination of the evidence. However, the
Supreme Court in Pro-Sys Consultants Ltd v Microsoft Corp, [2013] 3 SCR
477 at para 63, said that the test will not be met if, “assuming
all the facts pleaded to be true, it is plain and obvious that the plaintiff’s
claim cannot succeed.” Therefore, while the Court can examine the facts
as pled, it cannot go outside the four corners of the Statement of Claim in
determining if the test has been satisfied.
(1)
Can this action be brought as a class
proceeding?
[24]
Class proceedings provisions provide a
procedural mechanism for the consolidation of similar claims. It follows that
the viability of a class action is contingent on the viability of the
individual claims that comprise it. If the individual members of a class do
not have standing to make the claims that are asserted, then the class action
will necessarily fail.
[25]
This point was recognized by the Manitoba Court
of Appeal in Soldier v Canada (Attorney General), 2009 MBCA 12 at para
30 [Soldier CA], where the Court of Appeal held that “[t]he plaintiffs who bring the certification action must
have standing to sue as if it were an individual action.” Similarly, in
Bisaillon v Concordia University, 2006 SCC 19 at para 17, the majority
of the Supreme Court of Canada held that “[t]he class
action is…a procedural vehicle whose use neither modifies nor creates
substantive rights…It cannot serve as a basis for legal proceedings if the
various claims it covers, taken individually, would not do so.” Class
action legislation does not create any new cause of action; rather, it is
procedural.
[26]
Because a class action cannot succeed unless the
individual class members have standing, the issue of standing should be
considered as part of the analysis of whether the pleadings disclose a
reasonable cause of action under Rule 334.16(a). This was the approach taken
by the Manitoba Court of Queen’s Bench in Soldier v Canada (Attorney
General), 2006 MBQB 50 [Soldier QB], at para 26:
I am persuaded that the issue of standing is
a matter to be considered at this stage, in determining whether there is a
cause of action and whether s. 4(a) of the Act is met. There can be no cause
of action if there is no standing.
[27]
This approach was upheld in Soldier CA,
where the Court of Appeal at para 37 wrote that “the
certification judge did not err in principle or commit palpable and overriding
error when she considered standing as part of the question as to whether the
plaintiffs had a cause of action.”
[28]
To say that the issue of standing is, as a matter
of logic, part of the certification analysis is not to say that, as a matter of
procedure, they must always be addressed at the same time. As the Court of
Appeal emphasized in Soldier CA at para 34, “the
question of when to consider the issue of standing is discretionary and may
vary depending on the facts of each case and the nature of the evidence
presented.” It observed that, depending on the material that is before
the Court, it may be appropriate to consider the issue of standing earlier, as
part of a precertification motion to strike or for summary judgment, or later, as
was done in this case, as part of the certification hearing.
[29]
In this case, Canada submits that the individual
members of the plaintiff class lack standing to enforce the right to annuities
under the Numbered Treaties. Canada claims that the right to annuities under a
treaty is a collective right held by the Treaty Bands. It can therefore only
be enforced on behalf of the Bands as a whole, by way of a representative
action.
[30]
In order to understand why Canada says that representative
actions are uniquely well suited to the enforcement of collective rights, it is
useful to understand the history of that form of action and, in particular, its
history in the federal courts. The development of multiparty actions is
described in some detail by the Supreme Court of Canada in Western Canadian
Shopping Centres Inc v Dutton, 2001 SCC 46 at paras 19 - 29. Unlike the
law courts which judged individual questions between the plaintiff and the defendant,
courts of equity developed a rule of compulsory joinder that required that all
those interested in the subject matter of the litigation be made and named as
parties. The advantage of this development was that it “allowed the Court to examine every facet of the dispute and
thereby ensure that no one was adversely affected by its decision without first
having had an opportunity to be heard” and it “possessed
the additional advantage of preventing a multiplicity of duplicative
proceedings.”
[31]
The compulsory joinder rule became inadequate
when the interested parties to the conflict became too numerous to be joined.
The court of equity relaxed the rule and created the representative action. In
Chance v May (1722), Prec Ch 592, 24 ER 265, members of a partnership
were allowed to sue on their own behalf and on behalf of some 800 other
partners for the misapplication and embezzlement of funds by the partnership’s
former treasurer and manager. As the Supreme Court indicates: “The court allowed the action because ‘it was in behalf of
themselves, and all others the proprietors of the same undertaking, except the
defendants, and so all of the rest were in effect parties,’ and because ‘it
would be impracticable to make them all parties by name, and there would be
continual abatements by death and otherwise, and no coming at justice, if all
were to be made parties’.” The representative action thus became
available where there were numerous parties who had the same interest in an
action – one or more persons could represent all interested persons and the
decision was binding on all of them.
[32]
Prior to 2002, the requirement that the
persons have the same interest was reflected in Rule 114(1) of the Federal
Courts Rules which provided: “Where two or more
persons have the same interest in a proceeding, the proceeding may be brought
by or against any one or more of them as representing some or all of them.”
[33]
Rule 114 was repealed in 2002 when the class
action regime was brought into effect. However, The Hon. Allan Lutfy and Emily
McCarthy in Rule-Making in a Mixed Jurisdiction: The Federal Court (Canada)
(2010), 49 SCLR (2d) 313 indicate that Rule 114 was reinstated in an amended
format in 2007, at the request of the Aboriginal litigation bar. They observe
at page 324 that a subcommittee of the Rules Committee found that treaty rights
are generally not individual rights and that the availability of opt out in
class aboriginal proceedings is problematic:
A review of the nature of Aboriginal and
treaty rights in Canada demonstrates that they are, for the most part, sui
generis rights that are held communally and that arise, at times, from an
agreement that was entered into by a band or a nation with the Crown in right
of Canada. These rights are transmitted to individuals because of their
membership in a particular band or nation, but are not held by these
individuals in an individual capacity. Thus membership in the group is the sine
qua non of exercising or enforcing the right.
Governance of a band or a nation is
regulated by either customary law or the Indian Act. Thus members of First
Nations communities belong to a (generally) identifiable group, they are
seeking to enforce a communal right, and the capacity to opt out from the
litigation – due to the nature of the right at issue – is problematic at best.
[34]
As a result, Rule 114 was reinstated. A
representative action may be brought by a person acting as a representative of
one or more other persons on condition that “the issues
asserted by … the representative and the represented persons (i) are common
issues of law and fact and there are no issues affecting only some of those
persons, or (ii) relate to a collective interest shared by those persons.”
[35]
The plaintiffs acknowledged that treaty rights
are generally collective in nature, “belonging”
to the signatory First Nations. However, they submit that, in appropriate
circumstances, treaty rights claims can be pursued on an individual basis. In Soldier
CA, the Court of Appeal concluded that it was not plain and obvious that
individual members of the plaintiff First Nations lacked standing to seek
adjusted annuity payments by way of class action. The plaintiffs also refer to
Behn v Moulton Contracting Ltd., 2013 SCC 20 [Behn] where the
Supreme Court of Canada confirmed that treaty rights are collective, but went
on to note at para 33 that this does not completely preclude individual members
from asserting treaty rights because there may be individual aspects to those rights:
The Crown argues that claims in relation to
treaty rights must be brought by, or on behalf of, the Aboriginal community.
This general proposition is too narrow. It is true that Aboriginal and treaty
rights are collective in nature. However, certain rights, despite being held
by the Aboriginal community, are nonetheless exercised by individual members or
assigned to them. These rights may therefore have both collective and
individual aspects. Individual members of a community may have a vested
interest in the protection of these rights. It may well be that, in
appropriate circumstances, individual members can assert certain Aboriginal or
treaty rights, as some of the interveners have proposed. [authorities omitted]
In Behn the
Supreme Court of Canada chose not to determine whether there were some treaty
rights that could be enforced by individuals by way of a class proceeding as it
was unnecessary “at this stage of the development of
the law” and in light of the basis on which the decision was made.
[36]
In support of its position that the Annuity
Payments are individual rights, the plaintiffs point to the 2011 letter from
the Specific Claims Branch which sets out its view that the right to collect an
annuity payment is an individual right. Canada submits that this evidence is
not persuasive.
[37]
The plaintiffs also note that Canada distributes
the Annuity Payments directly to individual band members, and therefore they
say that it is properly construed as an individual right. Aboriginal Affairs
and Northern Development Canada’s [AANDC] Manual for the Administration of
Payments Pursuant to Treaty [the AANDC Manual] states that treaty annuities are
“payable to an individual” and that the
individual must acknowledge receipt by signing the treaty pay list, which “acts as evidence of the Crown’s fulfillment of its treaty
obligation to pay annuity to an individual.” Further, the
administrative processes in place at AANDC recognizes that the entitlement of
certain individuals survives even where their First Nation no longer exists or
is no longer recognized as a First Nation by the Crown.
[38]
Canada may ultimately succeed in establishing
that the right to receive an Annuity Payment is collective in nature because
the Numbered Treaties address the cessation of collectively-held land and were
entered into by Treaty Bands and First Nations. Canada’s position that it is
an individual’s connection with a Treaty Band or First Nation that creates his
or her entitlement to receive an annuity payment and the fact that this right
may be exercised or asserted individually does not change the nature of the
underlying right. However, the question the Court must address at this stage
is whether it is plain and obvious that the plaintiffs’ claim cannot succeed.
[39]
The present action is quite similar to that in Soldier
QB. That claim related to the Annuity Payments under Treaty 1 and Treaty
2. The certification judge described the claim to be essentially “that the Crown was under a continuing obligation to pay to
each Indian cash in an amount sufficient to purchase the basket of goods [being
as many blankets, clothing, prints, twine or traps, that $15.00 would have
purchased at the 1871 cost price in Montreal] at the current cost price.”
The judge rejected the certification motion, holding at para 43 that “the right to the annuity itself and any interpretation of
the treaty right necessary to determine that right are collective.” Although
the Court of Appeal dismissed the appeal, it found that the certification judge
erred in holding that the plaintiffs had no standing because the Annuity Payments
were a collective and not an individual right. The Court of Appeal states, at
para 59:
…the answer to whether this is a matter of
collective rights to be litigated by way of a representative action or a matter
of common rights to be litigated by way of class proceedings is not so clear a
matter of law that it can be said that it is plain and obvious that the
plaintiffs have no standing and therefore no cause of action.
[40]
My view of the jurisprudence, given the facts as
pled, parallels that of the Court of Appeal. It is not plain and obvious that
the plaintiffs have no standing such that this claim cannot succeed as a class
action.
(2)
Breach of Treaty Obligations
[41]
Canada submits that the plaintiffs’ claim that
it breached its treaty obligations and fiduciary duty is “entirely based on an unfounded assertion that the parties to
each of the Numbered Treaties intended and understood at the time each Numbered
Treaty was signed that the amount of the annuities would increase annually to
account for the effects of inflation.” Canada points out that at para
43 of their memorandum the plaintiffs admit that “the
assembly and review of historical evidence … did not uncover any evidence that
the parties negotiating the Numbered Treaties considered the potential for inflation.”
Accordingly, Canada submits that there is no air of reality to the plaintiffs’
claims and the plaintiffs cannot show that the pleading discloses a reasonable
cause of action.
[42]
The plaintiffs plead that it was the “common intention and understanding of the parties at the
time each of the Numbered Treaties was signed was that the Annuity Payments
would continue to provide a significant contribution to the welfare of the
individual beneficiaries.” The plaintiffs indicate that they will rely,
in part, on evidence that at the time the first treaties were negotiated in
1871, a skilled farm labourer and a female domestic earned only $156 and $60
annually. Treaty 1 provided an aboriginal family of 5 an annual sum of $25
which was described in the Commissioner’s report at the time as being “usually sufficient to procure many comforts for the family.”
[43]
The plaintiffs argue that neither party
contemplated that the purchasing power of the annuity would be dissipated over
time. Rather, they say that the mutual assumption was that the annuity would
provide the Indians with a level of “comfort”
based on the purchasing power of the amount agreed upon at the time. The
plaintiffs will be asking the Court to imply a contractual term on the basis of
that understanding in order to assure and provide efficacy to their mutual
agreement – namely, to imply a term that the annuity is to be adjusted to
maintain its purchasing power. This submission is based on the approach the
Supreme Court of Canada expressed at para 43 of R v Marshall, [1999] 3
SCR 456:
The law has long recognized that parties
make assumptions when they enter into agreements about certain things that give
their arrangements efficacy. Courts will imply a contractual term on the basis
of presumed intentions of the parties where it is necessary to assure the
efficacy of the contract, e.g., where it meets the "officious bystander
test": M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd.,
[1999] 1 S.C.R. 619, at para. 30. (See also: The "Moorcock"
(1889), 14 P.D. 64; Canadian Pacific Hotels Ltd. v. Bank of Montreal,
[1987] 1 S.C.R. 711; and see generally: Waddams, supra, at para. 490;
Treitel, supra, at pp. 190-94.) Here, if the ubiquitous officious
bystander had said, "This talk about truckhouses is all very well, but if
the Mi'kmaq are to make these promises, will they have the right to hunt and
fish to catch something to trade at the truckhouses?", the answer would
have to be, having regard to the honour of the Crown, "of course". If
the law is prepared to supply the deficiencies of written contracts prepared by
sophisticated parties and their legal advisors in order to produce a sensible
result that accords with the intent of both parties, though unexpressed, the
law cannot ask less of the honour and dignity of the Crown in its dealings with
First Nations. The honour of the Crown was, in fact, specifically invoked
by courts in the early 17th century to ensure that a Crown grant was effective
to accomplish its intended purpose: The Case of The Churchwardens of St.
Saviour in Southwark (1613), 10 Co. Rep. 66b, 77 E.R. 1025, at p. 67b and
p. 1026, and Roger Earl of Rutland's Case (1608), 8 Co. Rep. 55a, 77
E.R. 555, at p. 56b and pp. 557-58.
[emphasis added]
[44]
In my view, it cannot be said that it is plain
and obvious that the pleading as framed does not disclose a reasonable cause of
action for breach of treaty if, as is pled, it was the intention and
understanding of the parties at the time the treaty was signed that the annuity
would provide a certain level of comfort to the Indians. No adjustment clause
was negotiated because, as the plaintiffs submit and Canada appears to agree,
neither party considered then that the purchasing power of the annuity might be
substantially eroded. Those alleged facts, together with the application of
the “officious bystander test,” provide a
reasonable cause of action for breach of treaty.
(3)
Breach of Fiduciary Duty
[45]
Canada submits that the plaintiffs have failed
to plead the material facts necessary to meet either of the two tests for
establishing a fiduciary duty. Relying on Manitoba Métis Federation Inc v
Canada (Attorney General), 2013 SCC 14, it submits that the first situation
where a fiduciary duty may arise is “where there is a
specific or cognizable communal Aboriginal interest and a Crown undertaking of
discretionary control over the specific Aboriginal interest in a way that
invokes responsibility in the nature of a private law duty.” The second
situation is where “there is an undertaking by the
alleged fiduciary to act in the best interests of the alleged beneficiary or
beneficiaries, a defined person or class of persons vulnerable to a fiduciary’s
control (the beneficiary or beneficiaries), and a legal or substantial
practical interest of the beneficiary or beneficiaries that stands to be
adversely affected by the alleged fiduciary’s exercise of discretion or
control.”
[46]
With respect to the first situation, the
plaintiffs submit that the Annuity Provisions are a specific and cognizable
Aboriginal interest. They further submit that Canada assumed control over that
interest. I accept that the Annuity Provisions are arguably a specific
Aboriginal interest. It is pled that “the Minister is
responsible for setting the amount of the Annual Payments and for distributing
Annuity Payments” and that in doing so he is “under
an obligation to adjust the amount of the Annuity Payments to account for
changes in inflation and to preserve purchasing power.” In my view,
this is a sufficient basis to find that there is a reasonable cause of action
pled that Canada breached its fiduciary duty to the beneficiaries of the treaty
Annuity Payments.
[47]
On this basis, it cannot be said that it is
plain and obvious that the facts as pled fail to disclose a reasonable cause of
action of breach of fiduciary duty.
[48]
The plaintiffs have met the first part of the
test for certification.
B.
Identifiable Class of Two or More Persons
[49]
As noted above, Canada accepts that this requirement
has been met if the class is defined as “all persons
entitled to receive Annuity Payments under the terms of the Numbered Treaties
in accordance with chapter 4 of the March 2002 AANDC Manual for the
Administration of Payments Pursuant to Treaty.”
C.
Common Questions of Law or Fact
[50]
The law on what constitutes common questions of
law or fact for certification purposes is well settled.
[51]
The claims of the proposed class must raise
questions of law or fact that are common to all class members, regardless of
whether or not those common questions predominate over questions only affecting
individual class members: Rule 334.16(1)(c).
[52]
In order to assess whether there are such common
questions, the Court undertakes a purposive inquiry – the question to be
addressed is whether allowing the claim to proceed will “avoid duplication of fact-finding or legal analysis:”
Western Canada Shopping Centres Inc v Dutton, 2001 SCC 46 at para 39,
[2001] 2 S.C.R. 534 [Dutton], Rumley v British Columbia, 2001 SCC 69
at para 29, [2001] 3 S.C.R. 184 [Rumley], Vivendi Canada Inc. v
Dell'Aniello, 2014 SCC 1 at para 44, [2014] 1 S.C.R. 3 [Vivendi]. The
answer to a common question can be nuanced to reflect individual claims: Rumley
at para 32.
[53]
It is not essential that all class members be
identically situated vis-à-vis the opposing party and even a significant level
of difference among the class members does not preclude a finding of
commonality: Dutton at para 39, Pro-Sys at paras 108 and 112. To
establish commonality, evidence that the acts alleged actually occurred is not
required; rather, the evidence must demonstrate that the questions are common
to all class members: Pro-Sys at para 110.
[54]
In Dutton and Pro-Sys the Supreme
Court held that an issue will only be “common”
when its resolution is necessary for each member’s claim to be resolved. Dutton
held that success for one member must mean success for all. However, the
Supreme Court in Vivendi at paras 45 - 46 relaxed that strict
requirement somewhat such that the question now is, “does
success for one member result in failure for another?”:
Having regard to the clarifications provided
in Rumley, it should be noted that the common success requirement
identified in Dutton must not be applied inflexibly. A common question can
exist even if the answer given to the question might vary from one member of
the class to another. Thus, for a question to be common, success for one
member of the class does not necessarily have to lead to success for all the
members. However, success for one member must not result in failure for
another.
Dutton and Rumley
therefore establish the principle that a question will be considered common
if it can serve to advance the resolution of every class member's claim. As a
result, the common question may require nuanced and varied answers based on the
situations of individual members. The commonality requirement does not mean
that an identical answer is necessary for all the members of the class, or even
that the answer must benefit each of them to the same extent. It is enough
that the answer to the question does not give rise to conflicting interests
among the members.
[emphasis added.]
[55]
As noted earlier, the plaintiffs submit that
there are four common issues of law or fact requiring determination in this
litigation: Interpretation of the Numbered Treaties, whether Canada owes the
class members a fiduciary duty, whether there is an ongoing breach of Canada’s
treaty obligations, and the method of calculating compensation for the lost
annuity payments.
(1)
Treaty Interpretation
[56]
The plaintiffs submit that the interpretation of
the Annuity Provisions in the Numbered Treaties is a common issue because
resolution of this issue would substantially advance the claims of all the
proposed class members.
[57]
They argue that the wording of the Annuity
Provisions is substantially the same in each Numbered Treaty and that each
subsequent treaty was built on those preceding it. The plaintiffs refer
to the evidence of Ms. Holmes, a witness for Canada, who stated that the
Numbered Treaties cannot be properly considered in isolation and that
researching all of the Numbered Treaties individually would be “very inefficient” because of the “tremendous amount of overlap.” The plaintiffs submit
that resolving this as a common issue would avoid considerable duplication of
fact-finding and analysis.
[58]
Moreover, they submit that if the evidence
indicates that the Numbered Treaties must be interpreted differently, then all
that is required is a nuanced answer to the common question, which approach
does not mean the question is not common, as was endorsed in Vivendi.
[59]
Canada correctly points out at paras 16-17 of
its memorandum that the eleven treaties differ in wording and scope:
16. By express language in each
treaty, not only does the amount of the annual treaty payment differ, but
significantly, so does the mode or “currency” of payment. For example:
a) Treaties 1 and 2 provide for payment: “…to each Indian family
of five persons the sum of fifteen dollars Canadian currency, or in like
proportion for a larger or smaller family, such payment to be made in articles
as the Indians shall require of blankets, clothing, prints (assorted colours),
twine or traps, at the current cost price in Montreal, or otherwise, if her
Majesty shall deem the same desireable in the interests of Her Indian people,
in cash”.
b) On April 30, 1875, the Privy Council issued an Order in Council
increasing the amount of “the annual payment to each Indian under Treaties Nos.
1 and 2, from $3 to $5 per annum …” on the condition that anyone receiving the
increased payment would abandon their claim to the so-called “outside
promises”, which refers to certain items orally promised by the Treaty
Commissioners, which were not included in the text of the treaties.
c) Treaties 3 through 8, 10 and 11 provide for the annual treaty
payment of $5 in cash to each Indian. Treaties 4, 7, 8, and 11 stipulate that
the payment is to be “paid only to the heads of families”
d) Treaty 9 provides for the annual payment of $4 in cash for each
Indian, to be “paid only to the heads of families”.
17. The Numbered Treaties, with the
exception of Treaties 1, 2 and 9, also contain provisions for an annual treaty
payment (sometimes referred to as a “salary”) for the chief and councillors.
The amount of the payment and the number of councillors eligible to receive
this payment varies from treaty to treaty, and in some cases, by Treaty Band:
a) Although Treaties 1 and 2 do not provide for any supplemental
annual treaty payment for chiefs and councillors, the 1875 Order in Council
approved the “payment over and above such sum of $5, of $20 each and every year
to each chief”. Since 1875, Canada has also paid $15 per year to councillors
of Treaties 1 and 2 Bands.
b) Treaties 3, 5, and 6 provide for an aggregate payment of $30 per
chief and $20 per eligible councillor because in addition to the $5 annual
treaty payment to each Indian person, “it is further agreed” that each chief is
to be paid $25 per annum and each councillor is to be paid $15 per annum. The
number of councillors who may receive the additional payment varies: not exceeding
3 (Treaties 3 and 5) or up to 4 councillors (Treaty 6).
c) Treaties 4, 7, 8, 10 and 11 provide for an annual treaty payment
of $25 to each chief and $15 to each councillor. Unlike Treaties 1, 2, 3 5,
and 6, Treaties 4, 7, 8, 10 and 11 do not provide that the annual treaty
payment to the chief and councillors is in addition to the $5 annual treaty
payment for each Indian person. The number of councillors who may receive
payment varies by treaty: not to exceed 4 per Band (Treaty 4), unlimited
(Treaty 10). Others vary based on the size of the Band: not to exceed 4 to a
large Band and 2 to a small Band (Treaty 8), at least 30 members for the chief
to receive payment, and 2 councillors for every 200 members will receive
payment (Treaty 11). Treaty 7 itemizes how many councillors are entitled to
receive payment by Treaty Band group: not exceeding 15 (Blackfeet and Blood
Indians); 4 (Piegan and Sarcee Bands), and 5 (Stoney Indian Bands).
d) Treaty 9 contains no provisions whatsoever for any supplemental
annual treaty payment for chiefs and councillors.
[60]
I agree with Canada that treaty interpretation
is fact-driven and must be done on a treaty-by-treaty basis. I do not accept
Canada’s submission that the plaintiffs are asking the Court to interpret the
Annuity Provisions of all the Numbered Treaties en masse; they recognize
that there may be different interpretations given to the eleven treaties.
However, I do not agree with the plaintiffs that this would be no more than a “nuanced” approach of the sort described in Vivendi.
[61]
The approach described in Vivendi focuses
on the effect of the answer to the question on each class member. In that
context the common question, in my view, is with respect to each separate
treaty. The interpretation of each individual treaty may be a common question
for each individual entitled to an annuity under that treaty; however, there is
no obvious commonality among those class members and the individuals entitled
to an annuity under another treaty.
[62]
To suggest, as the plaintiffs do, that the
common issue is one of treaty interpretation is to state the common issue far
too broadly and in far too general a manner. The Supreme Court cautioned
against such an approach in Rumley at para 29:
It would not serve the ends of either
fairness or efficiency to certify an action on the basis of issues that are
common only when stated in the most general terms. Inevitably such an action
would ultimately break down into individual proceedings.
[63]
Even if the plaintiffs establish that
each subsequent treaty was negotiated with an eye to those that had preceded
it, that does not entail that the interpretation of the predecessor treaties
will provide much probative evidence as to the proper interpretation of a later
treaty. As the Supreme Court said in R v Marshall, [1999] 3 S.C.R. 456 at
para 80: “Each treaty must be considered in its unique
historical and cultural context.”
[64]
The evidence in the record, as summarized in
Canada’s memorandum at paras 130-146, reveals the unique historical and
cultural context of each of the treaties, including the following: (i) the 50
year gap between the negotiation of Treaty 1 and Treaty 11, (ii) the different
Treaty Bands negotiating each treaty and the lack of uniformity in the persons
who negotiated for Canada, (iii) the inclusion of a third party, Ontario, when
negotiating Treaty 9, (iv) the different geographic regions covered by each
treaty, (v) the changing and different motivations that each Treaty Band and
Canada had in finalizing the treaty, (vi) the different cultural interests that
each Treaty Band was anxious to preserve, and (vii) the different land areas
ceded by the Treaty Bands.
[65]
I agree with Canada that an individual analysis
of the treaty text, the mutual intention of the parties, and the original
purposes for which the various parties entered into the treaty must be done for
each of the Numbered Treaties: See Badger at paras 51-52, Marshall
at para 80, Sundown at para 25. Moreover, some of the individual
annuitants are recent additions to a treaty as a result of adhesions to an existing
treaty. What was the Band’s motivation, interest and intention in adhering to
the treaty, and was it the same as the original signatories?
[66]
The need to consider each treaty in its unique
historical and cultural context is incompatible with a class proceeding of the
scope proposed by the plaintiffs. In R v Goodstriker, 2012 ABPC 319 the
Alberta Provincial Court emphasized that a treaty cannot be considered based on
what the parties of another Aboriginal community agreed to in another treaty
involving different peoples.
[67]
All of these differences and individual
circumstances lead me to the conclusion that there is no common issue among the
members of the proposed class relating to the interpretation of eleven
different treaties.
(2)
Fiduciary Duty
[68]
For many of the same reasons outlined above, I
find there is no common issue as to whether Canada owed each annuitant a
fiduciary duty. Whether Canada made an undertaking in the ratification of each
of the Numbered Treaties to maintain the purchasing power of the annuity and
whether that created a fiduciary duty to the annuitants requires an analysis of
the circumstances of each separate treaty at the time of ratification or
adhesion. Any decision regarding whether a fiduciary duty arose from the
ratification of or adhesion to a particular treaty would only resolve the
question for that particular treaty.
(3)
Ongoing Breach
[69]
Likewise, whether there is an ongoing breach of
the Numbered Treaties or fiduciary duty can only be a common issue if there is
a common interpretation of all the Numbered Treaties, or a common finding of
fiduciary duty. Without a finding that there is a common obligation there can
be no corresponding common breach of that obligation.
(4)
Calculation of Damages
[70]
Unless a common interpretation of all the
Numbered Treaties is possible, the issue of methodology to calculate damages
cannot be common among the class members. If the plaintiffs were to succeed in
establishing that the Annuity Payments in one or more of the Numbered Treaties
must be adjusted, then a full analysis will be required for each such treaty to
determine the appropriate methodology for determining the value of the annuity
payments. Moreover, the commencement date of that adjustment will also need to
be determined for each treaty and there may be variations between annuitants from
original Treaty Bands and annuitants from Bands that adhered to the treaty much
later.
[71]
For these reasons, I find that there are no
common issues or facts that arise relating to all individual members of the
proposed class. The plaintiffs have failed to satisfy the third requirement
necessary to certify this action.
D.
Preferable Procedure
[72]
In assessing whether a class proceeding is the
preferable procedure for the just and efficient resolution of the common
issues, the Court must first assess whether such a proceeding would be a fair,
efficient and manageable method of advancing the claim and, secondly, whether it
would be preferable to other procedures: Rumley at para 35.
[73]
In assessing preferability, the common issues
must be considered in the context of the action as a whole and the Court must
take into account the “importance of the common issues
in relation to the claims as a whole:” AIC Limited v Fisher, 2013
SCC 69 at para 21 [AIC], citing Hollick at para 30. In Hollick,
the Supreme Court accepted that the Court should adopt a “practical cost-benefit approach to this procedural issue,
and to consider the impact of a class proceeding on class members, the
defendants, and the court.” This requires that the Court look at all
reasonably available means of resolving the claims, not just having the matter
proceed as individual claims.
[74]
In AIC it was held that the preferability
analysis is a comparative exercise where the Court is asked to consider the
extent to which the proposed class action may achieve the goals of judicial
economy, behaviour modification, and access to justice. The real question is
whether “other available means of resolving the claim
are preferable.”
[75]
The plaintiffs submit that individual actions
and representative proceedings are the only two reasonable alternatives, but
that both would be impractical and comparatively inefficient when compared to a
class proceeding.
[76]
Canada agrees with the plaintiffs that
individual actions would not be appropriate, but does so on the basis that no
individual right exists. Canada submits that the claims of these plaintiffs are
more appropriately advanced as a representative proceeding brought on behalf of
the HLFN that is limited in scope to the interpretation of the Annuity Provision
in Treaty 8. It says that a representative action with respect to all the
Numbered Treaties is not an appropriate means of resolving these claims because
the scope is too large and because it is inconsistent with the principles of
treaty interpretation.
[77]
Both parties agree that recourse to the specific
claims tribunal is not the appropriate avenue to address these claims.
[78]
Having found that the action cannot be certified
because the claims of the class do not raise common questions of fact or law,
it is not necessary that this element of the test be examined too closely.
Perhaps, it is better that less is said. However, for the benefit of the
parties and purely as obiter so as not to bind a judge in any future claim, let
me offer these observations.
[79]
I concur with the parties that commencing
numerous individual actions is not an appropriate manner of proceeding for the
obvious reasons stated by all counsel. On the other hand, one proceeding
covering all annuitants under eleven different treaties negotiated at different
times and under different conditions over-reaches. Either a class action or a
representative action restricted to the members of the signatory Treaty Bands
subject to one of the numbered treaties seems a credible and arguably
appropriate procedure.
[80]
While the choice of these alternatives remains
with the plaintiff(s), I think there is merit to the position of Canada that a
representative action may be more appropriate.
[81]
If the claims of the annuitants under a treaty were
to proceed as a class action, then each annuitant would be permitted the choice
of opting out of the action. The record reveals that, as of June 2014, one
individual action and fifteen representative actions have been commenced on
behalf of different treaty bands in this Court or in a superior court. Pursuant
to Rule 334.21(2) the persons covered by those actions will be automatically
excluded from this action unless they discontinue those actions. For
limitation reasons, the Court has been advised that discontinuance is unlikely.
[82]
The opt out provision in class actions
appropriately recognizes that an individual with a cause of action may choose
to pursue his or her own recourse and should not automatically be bound by a court’s
decision in a class action. For that reason, a decision in a class action is
not binding on an individual claimant who opts out, or on the defendant in
respect of that individual’s claim. This reality brings into sharp focus why
class actions are not generally appropriate when the fundamental issue to be
determined is the proper interpretation of a treaty provision. The Court cannot
accept that different courts or judges may reach differing interpretations of a
treaty (a result that is possible in a class action proceeding that is followed
by other representative or individual actions). This alone is reason to find
that where, as here, the claim rests upon the interpretation of a treaty, the
claim will be better advanced by way of representative action, where opting out
is not an option.
E.
Appropriateness of the Representative
Plaintiff
[83]
The plaintiffs submit that the Chief is entitled
to receive annuity payments pursuant to Treaty 8 and is therefore a member of
the Proposed Class. He is the elected chief of the HLFN.
[84]
The plaintiffs argue that a representative
plaintiff is not required to have a detailed knowledge of the legal issues
involved in the action or the civil litigation process to fairly and adequately
represent a class: See Maxwell v MLG Ventures Ltd., [1995] OJ No 1163 at
para 10 (On Ct J, Gen Div), Momi at para 75. The plaintiffs submit that
the Chief has demonstrated an understanding of the basic claims in this action
and the ability to instruct counsel. He appreciates that he would be
representing all members of the Proposed Class. Moreover, they say that he
does not have a conflicting interest on any of the common issues and has
summarized the agreements regarding fees and disbursements between him and
class counsel which provide that counsel may be paid up to one-third of any
amounts recovered or benefits obtained from the class action. In short, they
submit that all the requirements of Rule 334.16(1)(e) have been satisfied.
[85]
If the Court certifies the proposed class for
all Indian Act bands, the plaintiffs submit in the alternative that the
HLFN, represented by the Chief, is an appropriate representative plaintiff.
The HLFN’s registered members are entitled to receive annuity payments under
Treaty 8 and the Chief is its elected chief.
[86]
The plaintiffs submit that their litigation plan
demonstrates their ability to rigorously prosecute this claim on behalf of the
class. They point out that a litigation plan is “not
to be scrutinized in great detail at the certification stage,” but it
must show that the plaintiff and counsel have “thought
the process through and that they grasp its complexities:” Buffalo FC
at para 148.
[87]
Canada submits, citing passages from the
examination of the Chief, that neither he nor the HLFN is an appropriate
representative plaintiff for the proposed class.
[88]
I agree with Canada that in order to vigorously
and capably prosecute a class proceeding, the representative plaintiff must
have at least a basic understanding of the case to be advanced and his or her
role in the proceeding: Sullivan v Golden Intercapital (GIC) Investments
Corp., 2014 ABQB 212 at paras 54-57. Canada has persuaded me that the
examination of the Chief demonstrates that he lacks sufficient knowledge of the
facts and issues that are raised by the claim and does not understand his
responsibilities as a representative plaintiff. He has only a rudimentary
knowledge of the facts and issues raised by the claim he is asserting, he is
not familiar with the terms of any of the Numbered Treaties, or how entitlement
to Annuity Payments is determined. He appears to be little more than a
bystander in the litigation in that he has not played an active role in the
decisions relating to the litigation. He was not involved in identifying or
determining the Proposed Class and was not aware of whether any other Treaty
Bands or band members had authorized him or the HLFN to represent them in this
class proceeding. Although Canada is correct in pointing out that he has taken
no steps to identify witnesses or collect relevant documents, this is largely
irrelevant as it is early in the litigation to take these steps. However, it
is troubling that he appears to have little or no independent knowledge of the
pleadings, litigation plan or the notice plan in this action. Canada has
established through its examination of the Chief that he has no understanding
of class proceedings or his role as representative plaintiff.
[89]
While the plaintiffs contend that neither the
Chief nor the HLFN have interests that conflict with those of other members of
the Proposed Class, I must agree with Canada that neither plaintiff has
actually considered whether conflicts might exist. The pleadings in other
ongoing cases involving Annuity Payments show that a conflict may exist among
individuals with regard to who is or ought to be considered entitled to Annuity
Payments and the method for determining adjustments to the amount.
[90]
For these reasons, I find that neither plaintiff
is an appropriate representative plaintiff in the proposed class proceeding.
Conclusion
[91]
For these reasons the motion to certify this
action as a class proceeding must be dismissed. In keeping with Rule 334.39,
each party shall bear its own costs.
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