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Informanon to USERS INFORMAnON TO USERS Thil manulCript ha been reproduced fiant the micraftlm maater. UMI filml the texl diNCtly fram the origi~1 or copy lUbmitl8d. 11111, sorne thesil .nd dillertation copiel .,.in typewrtter fIIce, while oIhers m8Y betram any type d computerprinter. The qu.11tr of thl. Npraductlon •• c1epen.nt upon the quailly of the copy lubmlttecL Broken or indistinct print. coknd or poor qUBlity iIIullnlUons and pholographl, print bleedthraugh. lublt8nd8rd mIIrginl. and improper alignment ClIn adversely 8ftect l8PfOduction. ln the fIIlikely .vent htthe 8Uthor did not und UMI • complete manuscript anet there .re milling ~ges, theIe will be nated. Allo, if unautharizec:l copyright malterial had ta be removed, • note will indate the deletion. Ov.rsize materi.11 (e.g., mepl, drawingl, ch.rIa) .re rePfOducecl by sectioning the origi.l, begiming lit the upper Ieft-hnt comer Md cantinuing from 18ft ta right in 8qUBI sec:tionI with small overtaps. Photogl'lPhl indudecl in the original manulCripl have been reproducect xerogl'8phically in thi' capy. Higher quIIlity 8- x r bI8ck .nd white photogl'8phic printl are .......for .y photogl1lphl orillustr8tionl appearlng in thi. capy for ..8CIditioMl c:hqe. eom.ct UMI diNCtly ta arder. Bell & ~llnronnation and I..-ning 3QO North ZHb RGIId, Am Arbor, MI 48108-1348 USA 800-521-oeoo 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ANALYSIS OF THE FUNCTION AND APPLICATION OF THE DOCTRINE OF FIDUCIARY OBUGATION I1lustrated by An Assessment of Obligations Owed by Canada to Canadian Indians by Gerald Donegan AThesis submitted to the Faculty of Graduate Studies and Research in partial fulfillment of the requirements of the degree of master of laws. Institute of Comparative Law M'Gill University Montréal August, 1996 @ Gerald Donegant 1996 National Ubrary BibliothèQue nationale 1+1 of Canada du Canada AcQuisitions and Acquisitions et Bibliographie SeNas services bibliographiques 395 WellingtDn Street 385. rue Wellington Ottawa ON K1A 0N4 OttawaON K1A0N4 caMdIl c.neda The author bas granted a non­ L'auteur a accordé une licence non exclusive licence allowing the exclusive permettant à la National Library ofCanada to Bibliothèque nationale du Canada de reproduce, loan, distnbute or sen reproduire, prêter, distnbuer ou copies ofthis thesis in microform, vendre des copies de cette thèse sous paper or electronic formats. la forme de microfiche/film, de reproduction sur papier ou sur format électronique. The autbor retains ownership ofthe L'auteur conserve la propriété du copyright in tbis thesis. Neitber the droit d'auteur qui protège cette thèse. thesis nor substantial extracts from it Ni la thèse ni des extraits substantiels may he printed or otherwise de celle-ci ne doivent être imprimés reproduced without the author's ou autrement reproduits sans son permission. autorisation. 0-612-50928-1 -ü- ABSTRACT This thesis contains an analysis ofthe fonction and application ofthe doctrine offiduciary obligation, illustrated byan examination ofobligations Canada owes to Indians regarding reserve land transactions. Chapters 1and II describe the ongin and development ofthe doctrine and the way in which fiduciary obligations are formulated. Cbapters III and IV describe the Crownllndian relationship and suggest how officiais might estimate Crown obligations. The thesis condudes that the doctrine is legislative and that its funetion is to extend juridical protection to otherwise inadequately regulated relationships ofsocial or economic importance. Rules developed to govem the trustee/beneficiary relationship are adapted and applied to useful relationships to prevent victimization through the use ofinherent opportunities for exploitation. Acceptance by Indians ofrepresentatlve decision-making is critical ta stable reconciliation ofIndian and non-Indian interests. Pursuit ofthis objective informs the Crownllndian relationship and shapes the content ofCrown obligations. - üi- SOMMAIRE Cette thèse présente une analyse de la fonction et de l'application de la doctrine de l'obligation fiduciaire illustrée par l'examen des obligations du Canada envers ses Autochtones en matière d'opérations fondères portant sur des terres de réserve. Les Chapitres 1 et II décrivent l'origine et le développement de cette doctrine et s'intéressent à la formulation des obligations fiduciaires. Les Chapitres III et IV décrivent la relation existant entre la Couronne et les Autochtones et montrent comment les agents responsables peuvent estimer les obligations de la Couronne. La thèse énonce en conclusion que cette doctrine est de nature législative et a pour fonction d'assurer une protection juridique à des relations de portée sociale ou économique qui, autrement, seraient mal réglementées. Les règles régissant les rapports fiduciairelbénéficiaire sont adaptées et appliquées à de telles relations afin d'éviter toute victimisation découlant d'occasions d'exploitation que ces relations pourraient susciter. L'acceptation par les Autochtones d'un processus décisionnel représentatifest essentiel pour rapprocher de manière stable les intérêts des Autochtones et des Non-Autochtones. La poursuite de cet objectifétablit des relations entre la Couronne et les Autochtones et façonne le contenu des obligations de la CoW'Onne. ACKNOWLEDGMENTS 1would like to express mygratitude ta Dean StephenToope for taking time from a busy schedule ta supervise this project. His criticism and suggestions improved the end product immeasurably, and the patient and courteous manner inwhich theywere offered made our interviews a pleasure. 1 a1s0 want ta acknowledge the support and encouragement which 1 received from the Department ofJustice, and its former Deputy Minister, John Tait, Q.C. Without this assistance 1would not have been able to retum to school ta finish my studies. 1hasten ta add, however, mat the opinions expressed herein are my own and they do not necessarily represent the views ofthe Government ofCanada or any ofits administrative subdivisions or anyofits officiais. My wife, Julie, and our children Christopherand Eleanor, put aside plans oftheir own in order to provide me with time to study and prepare this thesis. They have each paid a lot for this project and 1owe them more than 1can say. -v- TABLE OF CONTENTS Abstraet • fi Sommaire ili Acknowledgments iv Table ofContents v INTRODUCTION 1 CHAPTER 1- THE FIDUCIARY REIATIONSHIP 13 1. Introduction 13 2. The Technique ofEquitable Intervention 16 a. Origins 16 b. The legislative character ofequitable jurisdiction 18 c. The remedial objective ofequitable intervention 21 d. The subsidiarity ofequitable doctrine 23 e. Discretion and tmst as essential characteristics 32 3. The Application ofthe Technique to Analogous Relationships 35 a. The regulation ofcompanypromoters 37 b. The basis ofthe analogy offiduciary relationships to trusts 44 4. Conclusion 49 CHAPTER fi - FlDUCIARY OBUGATIONS 53 1. Introduction 53 2. Opportunities for Exploitation 54 3. The Formulation ofFiduciary Obligations 61 a. The art & science ofeconomic inducement 67 i. improving the odds 69 • proofofbreach 71 • proofofcausation 73 -vi- • praofofquantum 76 ü. raising the stakes 78 b. Proteeting uniquelyvulnerable beneficiaries 80 i. reduced capacity ta re-negotiate 81 ü. diverse constituencyofbeneficiaries 83 4. Determining the Regulatory Needs ofSpecifie Relationships 84 a. Enforcing the duties offidellty 84 b. Enforcing the duties ofprudence 95 CHAPTER III - THE CROWN-INDIAN RELATION5HIP 97 1. Introduction 97 2. TheGu~nJud~enœ 98 3. The Crown's Historical Commitment to Native Peoples 102 a. The Royal Proclamation of 1763 103 b. The reserve system 112 i. Crownllndian relationship between 1814 & 1945 112 ü. Crownllndian relationship after WW fi 118 4. Guerin Revisited 126 S. Conclusion 132 CHAPTER IV- THE CROWN'S FIDUCIARY DUIYTO INDIANS 135 1. Introduction 135 2. Allotment ofUnsurrendered Reserve Land 143 a. The allotment process 143 b. Locatee rights 145 c. Possible polides 146 i. equitable distribution ofreserve land among members 148 ü. maintain sites for preservation ofaboriginal cultures 149 iii. laisserfaire 152 iVe promote & support internaI seU-management 153 d. Fidueiary obligations 157 -vü - i. allotment 158 ü. locatee leases 163 ili. alternative sources ofregulation 169 CONCLUSION 173 Table ofEnactments 177 Table ofCases 178 Bibliography 183 INTRODUCTION In the Guerin case,l the Supreme CourtofCanada he1d that the re1ationsbip between the Crown and native peoples imposed equitable obligations on the Crown which could he enforced tbrough the courts. Individual members ofthe panel disagreed about'the juridical basis ofthis re1ationship and about the time that enforceable o&ligations first arase, but MOst ofthe judges said that, at some point, the ClOwn came to stand in a tlduciary relationship to Indians.2 This charaeterization ofthe ClOwn/native relationsbip W3S lateremployed by the entire Court inthe Sparrow decision3 to define duties created by the Crown's constitutional undertaking to recognize and affirm aboriginal and treaty rights.4 Lower courts have since made use oftlduciary concepts to regulate dealings between the Crown and aboriginal groups incircumstances other than those which occurred in Guerin orSparrow.5 It has been argued that the doctrine offiduciary obligation is capable ofproviding the foundation for a coherent theory ofmutuallegal and political rights and obligations applicable to Canada and its provinces, on the one band, and aboriginal peoples, on the other.6 Commentators 1 Guerin v. R., [1984] 2 S.C.R. 335 [hereinaCter Guerin]. 2 The individual opinions are examjned indetail in chapter 3. 3 R. v. Sparrow, [1990] 1 S.C.R. 1075 [hereinafterSparrow). "' ConstituttonAct, 1982, s. 35, beingSchedule 8 to theCanadaAct1982 (U.K.), 1982, c. Il. 5 See, e.g., Krugerv. R.. (1985), [1986] 1 F.C. 3 (F.CA) [hereinafterKruger]; Delgamuukwv.R. (1991), 79 D.LR. (4~ 185 (B.C.S.C.);LowerKootenaylndtan Bandv.R. (1991),42 F.T.R. 241 (F.C.T.D.) [hereiDafterLowerKootenay); BlueberryRiverlndianBandv. Canada (Dept. oflndtanAffatrs & Nortbem DetJe/opment), [1995] 4 S.C.R. 344 [hereinafterB/uebenyRiver]. 6 W.R. ~Murtry Be A.
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