The Specific Claims Tribunal held that Canada breached its fiduciary obligations to the Popkum First Nation in 1959 in regards to the reallocation of the Seabird Island reserve and distribution of trust funds related to the reserve. The Popkum should have been compensated for the loss of its 1/7 interest in the Seabird Island reserve, and should have received a 1/7 share of the Seabird Island trust funds. Canada’s actions in 159 constituted a breach of fiduciary duty and a breach of the Crown’s duty to preserve and protect the Popkum’s confirmed reserve interest from exploitation by the Crown.

The Seabird Island reserve is located in the Fraser Valley of British Columbia. The reserve is approximately 4,500 acres in size and had been allotted by Commissioner Gilbert Sproat in 1879. The Tribunal noted that the April 1878 Order in Council appointing Sproat stated that his decisions regarding Indian land questions in the Yale District (which would include the Seabird Island reserve) were to be regarded as final. Sproat allotted the Seabird Island reserve to seven Indian Bands in common to provide them with sufficient cultivable lands to sustain themselves. The claimant Popkum First Nation was one of the seven Bands.

The Seabird Island reserve was formally surveyed in 1881. It fell within the “Railway Belt” conveyed to Canada in 1884. The original allocation of the reserve by Sproat in 1879 included a provision that the reserve would cease to be Indian land if the Indians had not sufficiently used the land within six years. The Tribunal was satisfied that Canada did not exercise its discretion regarding this condition. The evidence established that Canada considered the Seabird Island reserve to be established, and refused applications by settlers to squat on the land. The evidence also indicated that the Indians were not aware of the condition imposed by Sproat.

The Tribunal surveyed the history of the Seabird Island reserve before the 1959 reallocation. In 1890, Canada approved the taking of 96.4 acres from the reserve for railway purposes, and compensated all seven Bands including the Popkum. Canada later unsuccessfully sought surrenders from the seven Bands to half of the reserve. In 1918, residents of the reserve petitioned the Department of Indian Affairs to become a separate band. In response, the seven Bands asserted to the DIA that they were the recognized owners. Deputy Superintendent Duncan Campbell Scott approved an internal recommendation to set up a separate Seabird Island trust account. The DIA also began keeping an unofficial “band list” for the Seabird Island residents. The capital and revenue from the Seabird Island account, however, continued to belong formally to the seven Bands, and their release to the Seabird Island “band” was a source of continued debate up to 1959.

The Tribunal commented that, following 1918, the identity of the residents of the Seabird Island reserve was unclear. The formal affiliations of the residents to established Indian Bands was not recorded. Two residents in 1918 were recorded as being Popkum, but later evidence indicated that one individual was not a status Indian and the other was “of Chinese extraction”.

In 1946, after an internal investigation, the DIA recognized that beneficial ownership of the Seabird Island reserve remained with the seven Bands. During the 1940s and 1950s, the administration of the reserve was problematic, as numerous activities, transactions and proposals, including a proposed road right-of-way in 1949, did not proceed due to the requirement of consent from all seven Bands.

Beginning in 1951, the DIA approached the seven Bands to determine their willingness to relinquish their interests in the Seabird Island reserve and the trust funds. The Superintendent noted that surrenders would be required. The residents of the Seabird Island reserve again petitioned the Minister to constitute them formally as a separate band. The Superintendent proposed the use of provisions added to the Indian Act in the 1951 amendments to reallocate the Seabird Island reserve and to reorganize the Seabird Island residents into an official band.

Section 17(1) of the Indian Act, introduced in 1951,provides that the Minister may “constitute new bands” and “amalgamate bands” that, by a majority vote, request to be amalgamated. Subsection (2) provides that when a new band is established from an existing band or any part thereof, “such portion of the reserve lands and funds of the existing band as the Minister determines shall be held for the use and benefit of the new band” (emphasis added). The Act further provided that, in regard to “Indian moneys”, the Minister had the discretion to determine the purposes for how the moneys are used.

In 1957, the Indian Agent advised the seven Bands that the Seabird Island reserve issue had reached an impasse, and urged them to agree to a reallocation of the reserve to the residents. A Commission of Inquiry was established in 1958 to report on the reallocation issue. The majority report recommended that the residents of the reserve be established as an Indian Band pursuant to section 17 of the Indian Act, and that the entire reserve be held for their use and benefit. The Commission recommended that the funds in the trust account be distributed on a per capita basis among the seven Bands and the new Seabird Island Band. There was no evidence that any members of the Popkum band lived on the reserve at that time. The Seabird Island Indian Band was officially created effective January 1, 1959, and the trust funds were divided on January 31 between the new Band and the seven Bands on a per capita basis.

In this proceeding, Canada relied on evidence suggesting that the Popkum had released all interest in the Seabird Island reserve before 1959. A band council resolution (BCR) passed in 1951 appeared to release any interest of the Popkum to the “Seabird Island Band”. Chief Fred Cheer was the sole member of the Popkum band council at the time. During hearings before the Commission of Inquiry in 1958, Chief Cheer testified that he supported the idea of the residents of the reserve being set up as a Band, and that “I already signed for that in 1951”. Later in his testimony, Chief Cheer gave evidence suggesting that he was unaware of the 1951 BCR.

The Popkum filed this claim with the Specific Claims Tribunal on the basis that Canada had breached its fiduciary obligations with regard to the reallocation of the Seabird Island reserve in 1959 and the distribution of the trust funds.

The Tribunal rejected the arguments of Canada that the residents of the Seabird Island reserve had a “competing interest” in 1958/59. Only the seven Bands, including the Popkum, had a beneficial interest in the reserve. The Seabird Island reserve was not a “provisional reserve”. The Popkum had a 1/7 beneficial share of the reserve, as there was no indication that Sproat intended an unequal division.

Some of the residents of the Seabird Island reserve in 1959 were members of the seven Bands, and some were from other bands like the Cheam and the Spuzzum. The residents had no individual interest in the reserve. Provisions of the Indian Act prevent alienation to anyone but the Crown, and the residents of the Reserve (Aboriginal or otherwise) could not have acquired an interest due to the agreement or acquiescence of the seven Bands. The Tribunal also held that the Wewaykum case was distinguishable, as there was no error in listing the reserve as belonging to the seven Bands.

The Tribunal considered whether the Seabird Island Band could have had some entitlement in the reserve by descent. There would have to be evidence that members of the Popkum were among the Seabird Island Band that was created in 1959. The Tribunal was not satisfied that any members of the Popkum were residing on the reserve in 1959.

Canada owed fiduciary duties to the Popkum due to their 1/7 beneficial interest in the reserve. Section 17 of the Indian Act does not contain clear language to nullify or modify the Crown’s fiduciary obligations. Smith J. held:

Section 17(2) is not intended to give the Minister complete discretion to reallocate reserves de novo, whether a band subdivides or not, and regardless of any even-handedness among true successors. … The Court has been clear that the Crown’s role in administering reserves differs from its usual public role. Reserves are not public benefits programs.

The Supreme Court of Canada has repeatedly emphasized that the Indian Act provides a very high degree of protection to reserves, and discretionary powers under the Act involve fiduciary obligations of the highest order. Smith J. held:

Reading section 17(1) and (2) together, I find that, in the context of section 17(2), this duty means that the Minister may reallocate the assets of the “existing band” when the “new band” is composed at least in part from the “existing band”. In such cases, the Minister’s discretion may be properly exercised such that the assets of the parent band continue in the descendent bands without any overall loss. This interpretation is most consistent with the language of section 17, the overall scheme of the Indian Act regarding the protection of a band’s reserves, the SCC’s interpretive principles for statutes “relating to Indians”, and the SCC’s jurisprudence regarding the fiduciary duties that attach to confirmed reserves.

Section 17 does not provide clear language to remove, alter or diminish established fiduciary obligations. It does not authorize the disposition of one band’s confirmed reserve to another band with no descent-derived interest. A band in the position of the new Seabird Island Indian Band is a “third party” to the fiduciary relationship between Canada and the Popkum. A disposition of the Popkum’s reserve interest without consent resembles an expropriation.

The Tribunal held that Canada’s actions constituted a breach of fiduciary duty. The Minister treated the existing reserve as if it was available for reallocation de novo. No steps were taken to ascertain the extent to which the Popkum was represented among the Seabird residents. The DIA proceeded on a vague basis that an unknown number of the Seabird residents originated with the seven Bands. Smith J. held: “This was an egregious lack of effort by the Crown to ascertain who the beneficiaries of the SI Reserve were, and whether any Popkum members resided there”. There was no evidence of familial connections between the Popkum and the Seabird residents to create a descent-based entitlement to the Popkum’s interests in the reserve.

Section 17(2) does not provide the Minister with the discretion to reallocate reserve interests from a confirmed reserve holder (the Popkum) to a non-beneficiary like the Seabird Island Indian Band. The complexity of the situation does not absolve Canada from this finding. Smith J. further held that the Crown’s breach was exacerbated by the fact that it had urged the Popkum to release its interests in the Seabird Island reserve without compensation. He held: “In doing so, the Crown cannot be said to have been pursuing the Claimant’s best interests”.

The evidence indicated that many DIA officials considered the administration of the Seabird Island reserve to be arduous and unworkable, due to the requirement of obtaining consents from seven Bands for many decisions. The reallocation of the reserve in 1959 allowed the Crown to relieve itself of such administrative complexity at the expense of the Popkum’s legal and equitable interests. Smith J. described this aspect of the Crown’s actions as “self-serving” and “relieving itself of an administrative headache at the expense of Popkum”. The Minister’s decision meant that the Crown avoided providing an alternative agricultural land base to the Seabird residents or compensation to the Popkum.

The Tribunal was not persuaded by Canada’s arguments that it was caught in the middle between competing bands. Such an argument ignores the fact that each Indian Band is a separate and distinct reality, and is “tantamount to saying ‘all Aboriginals are the same’”. The fact that the residents of the Seabird Island reserve were Aboriginal does not remove, modify or alter the fiduciary obligations of the Crown to the Popkum.

The Tribunal also held that Canada breached its fiduciary obligations with respect to the trust funds. Only beneficiaries should have been included in a distribution, and “outsiders” like the new Seabird Island Indian Band should not have been included. The trust funds belonged to the seven Bands. The Minister had no authority to divide the Popkum’s trust funds. Again, complexities in administration did not absolve the Crown of fulfilling its fiduciary and statutory duties. The trust finds ought to have been distributed on a per Band basis.

http://205.193.184.246/apption/cms/UploadedDocuments/20117005/083-SCT-7005-11-Doc31(typedsignature)(1).pdf

Author

Scott Kerwin 
SKerwin@blg.com
604.640.4029

Expertise

Aboriginal Law