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Troy Hunter: fiduciary obligations, and free, prior, and informed consent

The appeal court had overturned the earlier decision and agreed that in a fiduciary relationship such as that of a band council to its band members that the band councillors are not permitted to put their personal interests first or to make a profit, without having obtained the prior consent of the membership as directed by section 2(3) of the Indian Act which states:

Unless the context otherwise requires or this Act otherwise provides,

(a) a power conferred on a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the electors of the band; and

(b) a power conferred on the council of a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the councillors of the band present at a meeting of the council duly convened.

Additionally, the B.C. Court of Appeal confirmed that band councils are created under the Indian Act, they are creatures of statute whose powers relate to “administration of Band affairs on their respective reserves”, and that they have “no other source of power”.  It seems some band councils operate under a guise of what is referred to as custom; however, the BCCA pointed out that such custom is different than what would attract s.35 Constitutional protection.  However, some band councils exercising self-government authority beyond the scope of the Indian Act power under the so-called “inherent right” or “inherent jurisdiction” might want to ensure that they have been duly authorized to do so.

While the decision in Louie v. Louie dealt with a band council awarding themselves a one-time honorarium bonus without having obtained the consent of the membership, the implications also involve other areas. In essence, the top court in British Columbia has upheld the Indian Act on the basis of the fiduciary principle.

When considering the notion of free, prior, informed consent (FPIC) as required under the United Nations Declaration on the Rights of Indigenous Peoples, and in examining the Indian Act, including the Aboriginal Affairs and Northern Development Canada (AANDC) Manual for the Administration of Band Moneys, it seems that the notion of FPIC is well embedded in the enactment and manual as it relates to the communal rights of aboriginal peoples. I recently posed the question to a FPIC forum hosted by Carleton University as to who has authority to give free, prior, informed consent; it seems that there are varied opinions. Under the Louie v. Louie BCCA decision, it’s clear that band councils operating under the Indian Act have consent requirements with their membership.

First Nations and Indian bands in undertaking due diligence ought to ensure they have not only obtained the free, prior, and informed consent of their members but that they have the evidence to back this up.  The manual states, “Since section 69 authority will ultimately rest with the Bands’ Chief and council. Departmental records must demonstrate that the consent of the membership had been obtained.”

It would seem that, the idea of free, prior, informed consent is a communal right. This communal right seems to have been first identified in the Royal Proclamation of 1763, where it is stated, “if at any Time any of the Said Indians should be inclined to dispose of the said Lands, the same shall be Purchased only for Us, in our Name, at some public Meeting or Assembly of the said Indians, to be held for that Purpose”.  It then appears that the notion of free, prior, and informed consent was embedded in the Proclamation made in 1763 and is now a right or freedom that belongs to the aboriginal peoples’ themselves.

Moreover, section 25 of the Canadian Charter of Rights and Freedoms states:

Section 25 – The guarantee in this Charter of certain rights and freedoms shall not be construed as to abrogate or derogate from any aboriginal, treaty or other rights or freedoms that pertain to the aboriginal peoples of Canada including

(a) any rights or freedoms that have been recognized by the Royal Proclamation of October 7, 1763; and

(b) any rights or freedoms that now exist by way of land claims agreements or may be so acquired.

The notion of consent was also referred to in the landmark Supreme Court of Canada case Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, where aboriginal title was officially recognized. In that case, at paragraph 76, the chief justice stated:

The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders. 

In the Tsilhqot’in case, it was not identified as to how to obtain the consent of an aboriginal group; however, these are communal rights and band councils must be aware of exercising powers as a fiduciary.

Band moneys are for the collective, they come because aboriginal rights and title are held communally; thus, the proper rights holders are the band members.  When a band council negotiates they do so for the benefit of the band; it is the band that must consent as to how its collective rights are to be affected.  This is reflected in the Manual for the Administration of Band Moneys where informed community consent is required in respect of settlement type funds.  Settlement type agreements must be ratified by referendum based on the informed community consent of the membership. Also, the Supreme Court of Canada recognized the communal aspect of aboriginal title and rights in Delgamuukw and Tsilqot’in and others.

In Delgamuukw v. British Columbia, 3 S.C.R. 1010:

115  A further dimension of aboriginal title is the fact that it is held communally. Aboriginal title cannot be held by individual aboriginal persons; it is a collective right to land held by all members of an aboriginal nation. Decisions with respect to that land are also made by that community. This is another feature of aboriginal title which is sui generis and distinguishes it from normal property interests.

In Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, 2 S.C.R. 256

  First, the Crown’s fiduciary duty means that the government must act in a way that respects the fact that Aboriginal title is a group interest that inheres in present and future generations. The beneficial interest in the land held by the Aboriginal group vests communally in the title-holding group. This means that incursions on Aboriginal title cannot be justified if they would substantially deprive future generations of the benefit of the land.

Getting back to Louie v. Louie, the BCCA summarized their decision by stating:

The removal of $25,000 from Band funds and the payment of $5,000 to each of the defendants was a clear and significant personal benefit to them, and them only. As a one-time payment, it did not benefit future members of Council or of the Band. Rather, it was a detriment to the Band. The conclusion seems to me inescapable that this was a breach of fiduciary duty, even in the context of a relatively informal and custom-based governance structure. In my view, such a structure should not deprive members of the Band of the protection of the fiduciary principle. They were entitled to hold the defendants to the high standard to which other fiduciaries are held in this country.

While Louie v. Louie stands to uphold the fiduciary duties, it also points to the need for having obtained free, prior, and informed consent of the true rights holders by a majority of the band, which in that case, hadn’t been proven.

On a side note in regards to fiduciary, in interpreting indigenous law, creation stories and oral histories can inform about indigenous customs or traditions. In 1918, the anthropologist Franz Boaz published a number of such stories in Kutenai Tales, one of which is the Ktunaxa story called “The Youth Who Killed The Chiefs”.  In that story, there were chiefs that did not share food and the people were hungry. A young warrior killed those chiefs that did not share so that the community would also benefit. The moral of the story is that to be a chief, one must put the people first, and that is what the fiduciary principle is all about.

Troy Hunter is a Ktunaxa lawyer who practices aboriginal law with Sea to Sky Law Corporation in British Columbia. Nothing herein is intended to create a lawyer-client relationship and shall not be construed as legal advice.

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