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Note to Users NOTE TO USERS This reproduction is the best 'copy available DUTY, THE HONOUR OF THE CROWN, AND UBERRIMA FIDES: FIDUCIARY DOCTRINE AND THE CROWN-NATIVE RELATIONSHIP IN CANADA LEONARD IAN ROTMAN A thesis submitted to the Faculty of Graduate Studies in partial fulfillment of the requirements for the degree of Master of Laws Graduate Programme in Law Osgoode Hall Law School York University April, 1993 National Library Bibliothèque nationale 1*1 of Canada du Canada Acquisitions and Acquisitions et Bibliographie Services services bibliographiques 395 Wellington Street 395. rue Wellinglon Ottawa ON KIA ON4 Ottawa ON KI A ON4 Canada Canada Your Lb Votre relérencé, Our liie Notre reldrence The author has granted a non- L'auteur a accordé une licence non exclusive licence allowing the exclusive permettant à la National Library of Canada to Bibliothèque nationale du Canada de reproduce, loan, distribute or sel1 reproduire, prêter, distribuer ou copies of this 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 author retains ownership of the L'auteur conserve la propriété du copyright in this thesis. Neither the droit d'auteur qui protège cette thèse. thesis nor substantial extracts fiom it Ni la thèse ni des extraits substantiels may be printed or otherwise de celle-ci ne doivent être imprimés reproduced without the author7s ou autrement reproduits sans son permission. autorisation. Duty, the Honour of the Crown, and Ubetraima Fidea: Fiduciary Doctrine and the Crown - Native Relationship in Canada Leonard Ian Rotman a thesis submitted to the Faculty of Graduate Studies of York University in partial fulfillrnent of the requirements for the degree of Permission has been granted to the LIBRARY OF YORK UNIVERSITY to lend or seIl copies of this thesis, to the NATIONAL LIBRARY OF CANADA to microfilm this thesis and to lend or seIl copies of the film, and to UNIVERSITY MICROFILMS to publish an abstract of this thesis. The author reserves other publication rights, and neither the thesis nor extensive extracts from it may be printed or otherwise reproduced without the author's written permission. ABSTRACT In Guerin o. R.,' the Supreme Court of Canada declared that the Crown owes fiduciary obligations to the aboriginal peoples of Canada. A number of cases decided after Guerin have relied upon its precedent to apply fiduaary doctrine to various relationships between the Crown and Native peoples. Most recently, the Supreme Court of Canada reaffimed the fiduciary nature of the Crown-Native relatiowhip in Ontario (Attorney-General) o. Bear Island ~oundation.~ Since its initial judicial sanction in Guerin , the characterization of the Crown-Native relationship as fiduciary has become axiornatic despite the failure of the judiciary to detail why the relationship is fiduciary. Outstanding issues, including fundamental questions such as who owes the fiduciary duty to Native peoples, have yet to be answered or adequately addressed. Nevertheless, fiduciary doctrine is routinely applied to aboriginal rights jurisprudence in Canada. The relationship between the Crown and the aboriginal peoples of Canada is unique. The combination of the entrenchment of aboriginal and treaty nghts in section 35(1) of the Constitution Act, 1982 and the history of Crown-Native relations which precipiced the constitutionalization of those rights illuminates rather than refutes this uniqueness. However, the nature of a relationship, not merely its uniqueness, is what renders it fiduciary. '(19&1), 13 D.L.R.(4th) 321 (S.C.C.). 2[1991] 3 C.N.L.R. 79 (S.C.C.). v This thesis centres around the premise that the relationship between the Crown and aboriginal peoples in Canada cannot be characterized as fiduciary in the absence of an adequate understanding of fiduciary doctrine and its application to that sui generis rela tionship. The si tuation-specificity of fiduciary doctrine iwists that fiduciary principles be applied to a relationship only where the nature of the relationship warrants it. Even then, fiduciary doctrine is applicable only to the extent that its general characteristics and principles are relevant to the relationship under scrutiny. Moreover, due to the malleability of fiduciary doctrine, its general principles and guidelines must first be established and understood if they are to be properly applied to the Crown-Na tive rela tionship. The goal of this thesis is to address the deficient understanding of the fiduciary nature of the Crown-Native relationship in Canadian aboriginal rights jurisprudence. This process will be initiated by surveying case law to reveal the current status of fiduciary doctrine as it is applied to the Crown- Native relationship. The understanding of fiduciary law in general, achieved through a critical examination of its historical, conceptual, and theoretical background, is the second step of the process, culminating in the formulation of a new theory of fiduciary doctrine. Finally, the effects of applying fiduciary law to the Crown-Native relationship will be discussed. It is hoped that this method of examination will result in the achievement of a greater understanding of the fiduciary nature of the relationship between the Crown and aboriginal peoples in Canada and the implications of applying fiduciary doctrine to it. The end result of these considerations will be to cernent the understanding of the Crown-Native vi fiduciary relationship by documenting the nexus between fiduciary doctrine and Crown-Native relations, thereby placing the Crown-Native rela tionship within its proper context in the sphere of Canadian aboriginal rights jurisprudence. vii ACKNOWLEDGMENTS 1 would like to thank the Department of Justice, Canada, for providing me with a Duff-Rinfret Graduate Scholarship in Law, and the Osgoode Hall Law School Graduate Programme in Law for its financial assistance, both of which have helped to make the production of this thesis possible. 1 owe a great deal of thanks to my thesis supervisor, Professor Brian Slattery, for generously giving of his time and advice from the initial stages of my research through to helping the thesis achieve its final form. 1 am also grateful to Professor Kent McNeil for providing me with his helpful commentary and suggestions. For al1 of the love and support that they have given to me over the years, my parents deserve special recognition. Without the faith and encouragement of my wife Tammy, however, this thesis would simply not have been possible. L.I.R., April, 1993 TABLE OF CONTENTS PAGE TABLE OF CASES CONSULTED xiii 1. INTRODUCTION II. METHODOLOGY III. THE CHARACTERIZATION OF THE CROWN-NATIVE FIDUCIARY RELATIONSHIP BY THE COURTS (a) Gueri~lv. R. : The Formulation of the Duty i. Summary and Conclusions (b) Judicial Charac teriza tions of the Crown's Du ty Af ter G tr erin i. Kruger v. R. ii. Apsnssirt v. X. iii. Ccinndinn Pcicific Ltd. v. Pnull Roberfs v. R. (c) R. v. Spclrrozu : The Guerilz Duty Reconsidered (d) The Crown's Duty in the Aftermath of Spnrrozu ii. Benr Isln~td iii. Delgnmmkw v. B.C. TABLE OF CONTENTS (cont'd) PAGE (e) Summary and Conclusions 102 IV. GENERAL PRINCIPLES OF FIDUCIARY DOCTRINE (a) The Wrongful Application of Fiduciary Doctrine Co) The Historic Roots of Fiduciary Law (c) Wha t Cons ti tu tes a Fiduciary Relation? i. The Strict Definition of a Fiduciary Rehtionship . 11. Some Theoretical Definitions of Fiduciary Relations 1. Property Theory 2. Reliance Theory 3. Inequali ty Theory 4. Contract Theory 5. Unjust Enrichment Theory 6. Utility Theory 7. Power and Discretion Theory 8. Rule-Based Theories iii. A New Theory of Fiduciary Doctrine iv. General Characteristics of Fiduciary Relations TABLE OF CONTENTS (cont'd) PAGE 1. The Fundamental Principle of Fiduciary Doctrine: Utmost Good Faith (Uberrimn Fides ) 2. The Categories of Fiduciary Relationships Are Never Closed 3. The Reverse Onus 4. The Si tua tion-Specifici ty of Fiduciary Doctrine 5. Summary (d) General Principles Governing Fiduciary Relations i. Fiduciaries Must Not Benefit From Their Positions ii. The Requirement of Full Disclosure S.. in. Fiduciaries Must No t Compromise Their Beneficiaries' Interests iv. Fiduciaries' Delegation of Authority (e) The Advantages of Fiduciary Law i. Fiduciary Remedies . il. An Illustration (f) Summary and Conclusions TABLE OF CONTENTS (cont'd) PAGE V. THE CROWN'S FIDUCIARY DUTY TOWARDS ABORIGINAL PEOPLES IN CANADA 208 (a) What Principles Apply to the Crown-Native Fiduciary Rela tionship? (b) Who Is Bound by the Fiduciary Obligation to Aboriginal Peoples? 1. The Alberta 1miin1z Associatio?~ Case ii. The British Crown's Obligations to the Aboriginal Peoples iii. The Canadian Crown's Obligations to the Aboriginal Peoples 1. Sf. Catherine's Millitig nnd Luntber Co. v. The Qtleeli 2. Robi~tso~zTreir f ies Alz~tuities Cnsel Ontnrio Mining Co. v. Seyboldl Trenty #3 A ~zrluities Case A. The Payment of Annuities and the Establishment of Reserves Under Trea ty B. Subsidiary Issues Raised by the Trilogy Decisions C. Summary 3. Gnrher v. Ontnrio/Benr Islnrzd/ Mitchell v. Peguis I~tdia~zBnnd iv. The Aboriginal Understanding of "The Crown" xii TABLE OF CONTENTS (cont'd) PAGE v. The Nexus Between Governmental Power and Fiduciary Responsibili ty vi. Summary and Conclusions 1s the Crown-Native Fiduciary Relationship Terminable? May the Crown's Fiduciary Obligation Be Reduced In Scope? 1s the Crown's Fiduciary Duty Purposive? The Crown's Duty and Conflict of Interest The Practical Application of Fiduciary Doctrine: A Reappraisal of Kruger v. R. i. A Critical Analysis of Kruger u. R. ii. A Reappraisal of Kruger Conclusions VI. CONCLUSION VII. BIBLIOGRAPHY xiii TABLE OF CASES CONSULTED A-G o. Great Southern and Western Rly Co. of Ireland, [1925] A.C. 754 (H.L.). Alberta Government Telephones v. Canada (C.R.T.C.) (1989), 61 D.L.R. (4th) 193 (S.C.C.).
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