Tuesday, October 16, 2012


[S.10] Guerin v The Queen
[S.20] R v Sparrow
[S.30] Mabo v Queensland (No. 2)
[S.40] Wik Peoples v Queensland
[5.05] Judges in the highest courts in Canada, Australia and New Zealand have recognised the existence of fiduciary duties owed by government to aboriginal persons. These duties function as a check on the exercise of government power that may otherwise be, in practical terms, unbridled. There appear to be two principal inquiries in this context. First, from where is the fiduciary duty derived? Secondly, what are the duties attendant to the fiduciary relationship? These inquiries are invariably interrelated, for the source of the fiduciary duty will in many cases determine its scope. It is in the Canadian courts in which the concept is most developed. The following extracts from the leading cases in each jurisdiction serve to convey the nature and scope of this emerging fiduciary responsibility.
[5.10] Guerin v The Queen (1984) 13 DLR (4th) 321 (Supreme Court of Canada)
[The Indian Act 1952 (Can) required reserves to be held by the Crown for the use of the respective Indian bands for which they were set apart (s 18 (1)). The Act also prohibited the sale, alienation, leasing or other disposal of reserve land until it had been surrendered to the Crown by the band for whose use and benefit in common the reserve was set apart (s 37). The latter provision was directed ensuring that, by interposing the Crown between the bands and prospective purchasers or lessees of their land, the bands would not be exploited. The Musqueam band of Indians surrendered part of an Indian reserve set apart for its use to the Crown “in trust to lease the same to such person or persons, and upon such terms as the Government of Canada may deem most conducive to our welfare and that of our people”. The Crown subsequently entered into a lease upon less favourable terms than those approved by the band at the surrender meeting. The leading judgment was delivered by Dickson J, with whom Beetz, Chouinard and Lamer JJ agreed.]
DICKSON J … [334] … The issue of the Crown’s liability was dealt with in the courts below on the basis of the existence or non-existence of a trust. In dealing with the different consequences of a “true” trust as opposed to a “political” trust, [the trial judge] noted that the Crown could be liable only if it were subject to an “equitable obligation enforceable in a court of law”. I have some doubt as to the cogency of the terminology of “higher” and “lower” trusts, but, I do agree that the existence of an equitable obligation is the sine qua non for liability. Such an obligation is not, however, limited to relationships which can be strictly defined as “trusts”. As will presently appear, it is my view that the Crown’s obligations vis-á-vis the Indians cannot be defined as a trust. That does not, however, mean that the Crown owes no enforceable duty to the Indians in the way in which it deals with Indian land.
In my view, the nature of Indian title and the framework of the statutory scheme established for disposing of Indian land places upon the Crown an equitable obligation, enforceable by the courts, to deal with the land for the benefit of the Indians. The obligation does not amount to a trust in the private law sense. It is rather a fiduciary duty. If, however, the Crown breaches this fiduciary duty it will be liable to the Indians in the same way and to the same extent as if such a trust were in effect. The fiduciary relationship between the Crown and the Indians has its roots in the concept of aboriginal, native or Indian title. The fact that Indian bands have a certain interest in lands does not, however, in itself give rise to a fiduciary relationship between the Indians and the Crown. The conclusion that the Crown is a fiduciary depends upon the further proposition that the Indian interest in the land is inalienable except upon surrender to the Crown.
An Indian band is prohibited from directly transferring its interest to a third party. Any sale or lease of land can only be carried out after a surrender has taken place, with the Crown acting on the band’s behalf … The surrender requirement, and the responsibility it entails, are the source of a district fiduciary obligation owed by the Crown to the Indians…
[340] … The purpose of this surrender requirement is clearly to interpose the Crown between the Indians and the prospective purchasers or lessees of their land, so as to prevent the Indians from being exploited … Through the confirmation in the Indian Act of the historic responsibility which the Crown has undertaken, to act on behalf of the Indians so as to protect their interests in transactions with third parties, Parliament has conferred upon the Crown a discretion to decide for itself where the Indians interest really lie … This discretion on the part of the Crown, far from ousting, as the Crown contends, the jurisdiction of the courts to regulate the relationship between the Crown and the Indians, has the effect of transforming the Crown’s obligation into a fiduciary one … [341] …[W]here by statute, agreement, or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary. Equity will then supervise the relationship by holding him to the fiduciary’s strict standard of conduct …
It should be noted that fiduciary duties generally arise only with regard to obligations originating in a private law context. Public law duties, the performance of which requires the exercise of discretion, do not typically give rise to a fiduciary relationship. As the “political trust” cases indicate, the Crown is not normally viewed as a fiduciary in the exercise of its legislative or administrative function. The mere fact, however, that it is the Crown which is obligated to act on the Indians’ behalf does not of itself remove the Crown’s obligation from the scope of the fiduciary principle. As was pointed out earlier the Indians’ interest in land is an independent legal interest. It is not a creation of either the legislative or executive branches of government. The Crown’s obligation to the Indians with respect to that interest is therefore not a public law duty. While it is not a private law duty in the strict sense either, it is none the less in the nature of a private law duty. Therefore, in this sui generis relationship, it is not improper to regard the Crown as a fiduciary.
Section 18(1) of the Indian Act confers upon the Crown a broad discretion in dealing with surrendered land. In the present case, the document of surrender, set out in part earlier in these reasons, by which the Musqueam band surrendered the land at issue, confirms this discretion in the clause conveying the land to the Crown “in trust to lease … upon such terms as the Government of Canada may deem most conducive to our Welfare and that of our people” When, as here, an Indian band surrenders its interest to the Crown, a fiduciary obligation takes hold to [342] regulate the manner in which the Crown exercises its discretion in dealing with the land on the Indians’ behalf.
I agree with [the trial judge] that before surrender the Crown does not hold the land in trust for the Indians. I also agree that the Crown’s obligation does not somehow crystallize into a trust, express or implied, at the time of the surrender. The law of trusts is a highly developed, specialised branch of the law. An express trust requires a settlor, a beneficiary, a trust corpus, words of settlement, certainty of object and certainty of obligation. Not all of these elements are present here. Indeed, there is not even a trust corpus. As the Smith decision [Smith v The Queen (1983) 147 DLR (3d) 237] makes clear, upon unconditional surrender the Indians’ right in the land disappears. No property interest is transferred which could constitute the trust res, so that even if the other indicia of an express or implied trust could be made out, the basic requirement of a settlement of property has not been met. Accordingly, although the nature of Indian title coupled with the discretion vested in the Crown are sufficient to give rise to a fiduciary obligation, neither an express nor an implied trust arises upon surrender.
Nor does surrender give rise to a constructive trust … Any similarity between a constructive trust and the Crown’s fiduciary obligation to the Indians is limited to the fact that both arise by operation of law; the former is an essentially restitutionary remedy, while the latter is not. In the present case, for example, the Crown has in no way been enriched by the surrender transaction, whether unjustly or otherwise, but the fact that this is so cannot alter either the existence or the nature of the obligation which the Crown owes.
The Crown’s fiduciary obligation to the Indians is therefore not a trust. To say as much is not to deny that the obligation is trust like in character. As would be the case with a trust, the Crown must hold surrendered land for the use and benefit of the surrendering band. The obligation is thus subject to principles very similar to those which govern the law of trusts concerning, for example, the measure of damages for breach. The fiduciary relationship between the Crown and the Indians also bears a certain resemblance to agency, since the obligation can only be characterized as a duty to act on behalf of the Indian bands who have surrendered lands, by negotiating for the sale or lease of the land [343] to third parties. But just as the Crown is not a trustee for the Indians, neither is it their agent; not only does the Crown’s authority to act on the band’s behalf lack a basis in contract, but the band is not a party to the ultimate sale or lease, as it would be if it were the Crown’s principal. I repeat, the fiduciary obligation which is owed to the Indians by the Crown is sui generis. Given the unique character both of the Indians’ interest in land and of their historical relationship with the Crown, the fact that this is so should occasion no surprise.
The discretion which is the hallmark of any fiduciary relationship is capable of being considerably narrowed in a particular case. This is as true of the Crown’s discretion vis-á-vis the Indians as it is of the discretion of the trustees, agents, and other traditional categories of fiduciary. The Indian Act makes specific provision for such narrowing in ss 18(1) and 38(2). A fiduciary obligation will not, of course, be eliminated by the imposition of conditions that have the effect of restricting the fiduciary’s discretion. A failure to adhere to the imposed conditions will simply itself be a prima facie breach of the obligation. In the present case both the surrender and the Order in Council accepting the surrender referred to the Crown leasing the land on the band’s behalf. Prior to the surrender the band had also been given to understand that a lease was to be entered into with the Shaughnessy Heights Golf Club upon certain terms, but this understanding was not incorporated into the surrender document itself. The effect of these so-called oral terms will be considered in the next section.
[344] … [T]he Crown, in my view was not empowered by the surrender document to ignore the oral terms which the band understood would be embodied in the lease. The oral representations form the backdrop against which the Crown’s conduct in discharging its fiduciary obligation must be measured. They inform and confine the field of discretion within which the Crown was free to act. After the Crown’s agents had induced the band to surrender its land on the understanding that the land would be leased on certain terms, it would be unconscionable to permit the Crown simply to ignore those terms. When the promised lease proved impossible to obtain, the Crown, instead of proceeding to lease the land on different, unfavourable terms, should have returned to the band to explain what had occurred and seek the band’s counsel on how to proceed. The existence of such unconscionability is the key to a conclusion that the Crown breached its fiduciary duty. Equity will not countenance unconscionable behaviour in a fiduciary, whose duty is that of utmost loyalty to his principal.
While the existence of the fiduciary obligation which the Crown owes to the Indians is dependent on the nature of the surrender process, the standard of conduct which the obligation imports is both more general and more exacting than the terms of any particular surrender. In the present case the relevant aspect of the standard of conduct is defined by a principle analogous to that which underlies the doctrine of promissory or equitable estoppel. The Crown cannot promise the band that it will obtain a lease of the latter’s land on certain stated terms, thereby inducing the band to alter its legal position by surrendering the land, and then simply ignore that promise to the band’s detriment … In obtaining without consultation a much less valuable lease than that promised, the Crown breached the fiduciary obligation it owed the band. It must make good the loss suffered in consequence.
1. Wilson J (with whom Ritchie and McIntyre JJ agreed) held that, while the Crown did not hold reserve land under s 18 of the Indian Act 1952 in trust for the bands interests were limited by the nature of Indian title, it did hold the lands subject to a fiduciary duty to protect and preserve the bands’ interests were limited by the nature of Indian title, it did hold the lands destruction (at 357). Thus the Crown could not utilise reserve land for purposes incompatible with the bands’ Indian title unless the relevant band agreed.
2. From where did fiduciary duty in Guerin stem? How did Dickson J determine its extent? Cf Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 AT 511 per Kirby, P, who held that the Aboriginal Welfare Board was in the nature of a statutory guardian of the appellant and, as such, the Board was obliged to act “in a manner apt for a fiduciary”. Contra at 519 per Powell JA dissenting; Williams v Minister, Aboriginal Land Rights Act 1983 (1999) 25 Fam LR 86 at 231-243 per Abadee J; State of South Australia v Lampard-Trevorrow (2010) 106 SASR 331 at [329]-[342] (FC).
3. In the context of fiduciary duties owed by government to aboriginal persons, is there a role for the trust? If so, how must the trust, as understood in the private law sphere, be modified to apply in the public law domain? Why was Dickson J unwilling to declare the existence of a trust? Cf Wilson J who held at 361 that the Crown’s fiduciary duty was founded upon aboriginal title, and “crystallized upon the surrender into an express trust of a specific land for a specific purpose”. Samson Indian Band and Nation v Canada (1995) 125 DLR (4th) 294 illustrates one of the difficulties in applying private trust concepts in the public sphere. It was argued that, as legal advice sought by trustees belongs to the beneficiaries in private trusts, a similar result ought to prevail in the government-aboriginal citizen relationship. The Canadian Federal Court of Appeal, in rejecting that contention, said (at 303):
The Crown can be no ordinary “trustee”. It wears many hats and represents many interests, some of which cannot be conflicting. It acts not only on behalf of or in the interests of the Indians, but it is also accountable to the whole Canadian population. It is engaged in many regards in continuous litigation … There being many possible “clients” or “beneficiaries”, there being many possible reasons for which the Crown sought legal advice, there being many possible effects in a wide variety of areas deriving from the legal advice sought, it is simply not possible at this stage to assume in a general way that all documents at issue, in whole or in part, are documents which were obtained or prepared by the Crown in the administration of specific “trusts” alleged by the respondents and in the course of the Crown carrying out its duties as “trustee” for the respondents.
R v Sparrow
[5.20] R v Sparrow (1990) 70 DLR (4th) 385 (Supreme Court of Canada)
[The accused was charged with the offence of fishing with a driftnet longer than permitted by the terms of an Indian food licence that had been issued to the Musqueam band, of which he was a member. In response, the accused argued that the regulation pursuant to which the licence was issued was invalid on the ground that the band had an aboriginal right to fish for food that could not be restricted by a licence. The accused pointed to s 35(1) of the Constitution Act 1982 (Can) – which read “the existing aboriginal and treaty rights of the aboriginal peoples are hereby recognized and affirmed” –to support this contention. The evidence showed that the Musqueam band operated as an organised society prior to the settlement of British Colombia by the white man, and that fishing for salmon in the area in question was, and remained, an integral part of their life.]
DICKSON CJC AND LA FOREST J … [408] … In our opinion, Guerin [v The Queen (1984) 13 DLR (4th) 321, extracted at [5.10]], together with R v Taylor and Williams (1981) 62 CCC (2d) 227, ground a general guiding principle for s 35(1). That is, the government has the responsibility to act in a fiduciary capacity with respect to aboriginal peoples. The relationship between the government and aboriginals is trust-like, rather than adversarial, and contemporary recognition and affirmation of aboriginal rights must be defined in light of this historic relationship …
[409] … There is no explicit language in [s 35(1)] that authorizes this court or any court to assess the legitimacy of any government legislation that restricts aboriginal rights. Yet, we find that the words “recognition and affirmation” incorporate the fiduciary relationship referred to earlier and so import some restraint on the exercise of sovereign power. Rights that are recognized and affirmed are not absolute. Federal legislative powers continue, including, of course, the right to legislate with respect to Indians pursuant to s 91 (24) of the Constitution Act 1867. These powers must, however, now be read together with s 35(1). In other words, federal power must be reconciled with federal duty and the best way to achieve that reconciliation is to demand the justification of any government regulation that infringes upon or denies aboriginal rights. Such scrutiny is in keeping with … the concept of holding the Crown to a high standard of honourable dealing with respect to the aboriginal peoples of Canada as suggested by Guerin v The Queen
Section 35(1) suggests that while regulation affecting aboriginal rights is not precluded, such regulation must be enacted according to a valid objective. Our history has shown, unfortunately all to [410] well, that Canada’s aboriginal peoples are justified in worrying about government objectives that may be superficially neutral but which constitute de facto threats to the existence of aboriginal rights and interests. By giving aboriginal rights constitutional status and priority, Parliament and the provinces have sanctioned challenges to social and economic policy objectives embodied in legislation to the extent that aboriginal rights are affected. Implicit in this constitutional scheme is the obligation of the legislature to satisfy the test of justification. The way in which a legislative objective is to be attained must uphold the honour of the Crown and must be in keeping with the unique contemporary relationship, grounded in history and policy, between the Crown and Canada’s aboriginal peoples. The extent of legislative or regulatory impact on an existing aboriginal right may br scrutinized so as to ensure recognition and affirmation.
The constitutional recognition afforded by the provision, therefore, gives a measure of control over government conduct and a strong check on legislative power. While it does not promise immunity from government regulation in a society that, in the twentieth century, is increasingly more complex, interdependent and sophisticated, and where exhaustible resources need protection and management, it does hold the Crown to a substantive promise. The government is required to bear the burden of justyfying any legislation that has some negative effect on any aboriginal right protected under s 35(1)
1. Their Honours concluded that (at 413): “The special trust relationship and the responsibility of the government vis-á-vis aboriginals must be the first consideration in determining whether the legislation or action in question can be justified.” The court held that the constitutional entitlement contained in s 35(1) required the Crown to ensure that its regulations were consistent with the giving of top priority to the Indian food fishery. A new trial was ordered to ascertain this.
2. Can the fiduciary obligation owed to aboriginal persons be seen to be a form of reverse discrimination? Is it possible that the Crown’s fiduciary duty to a minority could be inconsistent with the public benefit generally? How should the court deal with such a situation?
3. If a contract between two parties use the phrase “recognises and affirms” (or similar language) regarding the duty of one party to another, will this carry with it a fiduciary duty? For this to be so, must there also be vulnerability?
4. In New Zealand, pursuant to the State-Owned Enterprises Act 1986, the Crown proposed to transfer lands without establishing any system to determine the existence over such land of claims to the Waitangi Tribunal. In order to ally these fears, s 9 of the Act provided that nothing contained “shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi”. Bisson J explained the Crown’s obligation in this respect in New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 AT 715:
The Maori chiefs looked to the Crown for protection from other foreign powers, for peace and for law and order. They reposed their trust for these things in the Crown believing that they retained their own rangatiratanga and taonga. The Crown assured them of the utmost good faith in the manner in which their existing rights would be guaranteed and in particular guaranteed down to each individual Maori the full exclusive and undisturbed possession of their lands which is the basic and most important principle of the Treaty in the context of the case before this court.
In Te Runanga o Wharekauri Rekohu Inc v Attorney-General [1993] 2 NZLR 301 at 306 Cooke P made the following observation:
The opinions expressed in this court in the cases already mentioned as to fiduciary duties and a relationship akin to a partnership have now been further strengthened by judgments in the Supreme Court of Canada and the High Court of Australia. In these judgments there have been further affirmations that the continuance after British sovereignty and treaties of unextinguished aboriginal title gives rise to a fiduciary duty and a constructive trust on the part of the Crown … In New Zealand the Treaty of Waitangi is major support for such a duty. The New Zealand judgements are part of widespread international recognition that the rights of indigenous peoples are entitled to some effective protection and advancement.
Given that Australia has no equivalent to the Treaty of Waitangi to support a fiduciary duty by government to indigenous citizens, on what basis could such a duty be found? Consider in this context the following extract from the judgment of Toohey J in Mabo v Queensland (No 2).
[5.30] Mabo v Queensland (No 2) (1992) 175 CLR 1 (High Court of Australia)
[The applicants, who were indigenous inhabitants of the Murray Islands located of the Queensland coast, sought declarations that: (a) the Meriam people were entitled to use and enjoy the islands (as owners, possessors or occupiers); (b) the Islands had never been “Crown land” under the (since repealed) Land Act 1962 (Qld); and (c) the State of Queensland was not entitled to extinguish the title of the previous Meriam people. The evidence established that the Meriam people occupied the said islands long before the white settlement of Australia, and that the islands’ current inhabitants descended therefrom. Toohey J was alone in relying on the fiduciary principle in acceding to the applicants’ contentions.]
TOOHEY J … [199] …The Plaintiff seeks a declaration that: “the Defendant is under a fiduciary duty, or alternatively bound as a trustee, to the Meriam people, including the Plaintiffs, to recognize and protect their rights and interests in the Murray Islands.” They argued that such a duty arises by reason of annexation, over which the Meriam people had no choice; the relative positions of power of the Meriam people and the Crown in right of Queensland with respect to their interests in the Islands; and the course of dealings by the Crown with the Meriam people and the Islands since annexation. However, while the plaintiffs claim the declaration just [200] mentioned, the statement of claim does not seek any specific relief for a breach of fiduciary duty.
Existence of the obligation
[His Honour discussed the factors giving rise to fiduciary duty, with particular reference to Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 (see the extract at [4.25]), and continued:]
The defendant argued that there is no source for any obligation on the Crown to act in the interests of traditional titleholders and that, given the power of the Crown to destroy the title, there is no basis for a fiduciary obligation. This can be answered in two ways. First, the argument ignores the fact that it is, in part at least, [201] precisely the power to affect the interests of a person adversely which gives rise to a duty to act in the interests of that person; the very vulnerability gives rise to the need for the application of equitable principles. The second answer is that the argument is not supported by the legislative and executive history of Queensland in particular and of Australia in general. In the present case, a policy of “protection” by government emerges from the legislation, examples of which are quoted above, as well as by executive actions such as the creation of reserves, the removal of non-Islanders from the Islands in the 1880’s and the appointment of a school teacher and an “adviser” in 1892. More general indications include the stated policy of protection underlying the condemnation of purported purchases of land by settlers from Aborigines as, for example, the John Batman incident referred to earlier. And even the general presumption that the British Crown will respect the rights of indigenous peoples occupying colonized territory, as discussed above, itself indicates that a government will take care when making decisions which are potentially detrimental to aboriginal rights.
The defendant also argued that the Crown cannot be a trustee or fiduciary in the present circumstances because its responsibilities towards the Islanders with respect to the reserve are a matter of “governmental discretion”, in reliance upon the “political trust” decisions in Kinloch v Secretary of State for India [(1882) 7 App Cas 619] and Tito v Waddell (No 2) [[1977] Ch 106], rather than an enforceable equitable obligation. In Kinloch Lord Selbourne LC said (at 625-626):
Now the words “in trust for” are quite consistent with, and indeed are the proper manner of expressing, every species of trust a trust not only as regards those matters which are the proper subjects for an equitable jurisdiction to administer, but as respects higher matters, such as might take place between the Crown and public officers discharging, under the directions of the Crown, duties or functions belonging to the prerogative and to the authority of the Crown. In the lower sense they are matters within the jurisdiction of, and to be administered by, the ordinary Courts of Equity; in the higher sense they are not.
Whether the idea of a political or “higher” trust has any utility need not be considered here because it does not, in any case, apply in the present circumstances. Kinloch concerned a specific grant of goods by Royal Warrant to the Secretary of State for India in Council “in trust” for armed forces personnel. The interest claimed [202] to be held in trust was created expressly by the Crown itself. If a traditional title exists, it arises as a matter of common law, quite independently of any grant or other action on the part of the Crown. And if it is extinguishable, then the existence of the power is also a matter of law independent of legislation or the Crown’s action. Ultimately the decisions in both Kinloch and Tito v Waddell (No 2) turned on the construction of an instrument to determine whether it created an express trust. The obligation relevant in the present case arises as a matter of law because of the circumstances of the relationship.
[His Honour then discussed Guerin v The Queen (1984) 13 DLR (4th) 321 (extracted at [5.10]), and continued:]
[203] … [I]f the crown in right of Queensland has the power to alienate land the subject of the Meriam people’s traditional rights and interests and the result of that alienation is the loss of traditional title, and if the Meriam’s people’s power to deal with their title is restricted in so far as it is inalienable, except to the Crown, then this power and corresponding vulnerability give rise to a fiduciary obligation on the part of the Crown. The power to destroy or impair a people’s interest in this way is extraordinary and is sufficient to attract regulation by equity to ensure that the position is not abused. The fiduciary relationship arises, therefore, out of the power of the Crown to extinguish traditional title by alienating the land or otherwise; it does not depend on an exercise of that power.
Moreover if, contrary to the view I have expressed, the relationship between the Crown and the Meriam people with the respect to traditional title alone were insufficient to give rise to a fiduciary obligation, both the course of dealings by the Queensland government with respect to the Islands since annexation … and the exercise of control over or regulation of the Islanders themselves by welfare legislation … would certainly create such an obligation.
Nature of the obligation
To say that, where traditional title exists, it can be dealt with and effectively alienated or extinguished only by the Crown, but that it can be enjoyed only by traditional owners, may be tantamount to saying that the legal interest in the traditional rights is in the Crown whereas the beneficial interest in the rights is in the indigenous owners. In that case the kind of fiduciary obligation imposed on the Crown is that of a constructive trustee. In any event, the Crown’s obligation as a fiduciary is in the nature of, and should be performed by reference to, that of a trustee. In Guerin Dickson J said, referring to the Crown’s duty towards the Musqueam Indians (at 334): “This obligation does not amount to a trust in the private law [204] sense. It is rather a fiduciary duty. If, however, the Crown breaches this fiduciary duty it will be liable to the Indians in the same way and to the same extent as if such a trust were in effect.” Thus, the fiduciary obligation on the Crown, rooted in the extinguishability of traditional title, is in the nature of the obligation of a constructive trustee.
Content of the obligation
The content of a fiduciary obligation or constructive trust will be tailored by the circumstances of the specific relationship from which it arises. But generally, to the extent that a person is a fiduciary he or she must act for the benefit of the beneficiaries. Moreover, this general mandate comprises more particular duties with respect to, first, the procedure by which a fiduciary makes a decision or exercises a discretion and secondly, the content of that decision. On the one hand, a fiduciary must not delegate a discretion and is under a duty to consider whether a discretion should be exercised. And on the other hand, a fiduciary is under a duty not to act for his or her own benefit or for the benefit of any third person. The obligation on the Crown in the present case is to ensure that traditional title is not impaired or destroyed without the consent of or otherwise contrary to the interests of the titleholders. For example, the Crown could not degazette the Islands, thereby terminating the reserve, or simply alienate the Islands contrary to the interests of the Islanders; nor could it take these or any other decisions affecting the traditional title without taking account of that effect. If it did, it would be in breach of its duty and liable therefore.
The content of the fiduciary obligation in this case will be different from that of an obligation arising as a result of particular action or promises by the Crown. For example, in Delgamuukw v British Columbia McEachern CJ found [1991) 79 DLR (4th) 185 at 482] the content of the Crown’s fiduciary obligation to be:
to permit aboriginal people, but subject to the general law of the province, to use any unoccupied or vacant Crown land for subsistence purposes until such time as the land is dedicated to another purpose. The Crown would breach its fiduciary duty [205] it sought arbitrarily to limit aboriginal use of vacant Crown land.
But that is not the kind of duty which is relevant here. Delgamuukw differed from the present case significantly in that both the nature of the protected rights and the source of the Crown’s obligation were different. McEachern CJ held that Indians’ traditional title had been extinguished prior to Confederation (at 464, 477-478); that this unilateral extinguishment was, in part, the source of the Crown’s obligation; and that the rights of the Indians protected by the obligation were those invoked by promises made by the Crown after extinguishment, to permit the Indians to use land not used for other purposes. In the present case, extinguishment or impairment of the traditional title would not be a source of the Crown’s obligation, but a breach of it.
A fiduciary has an obligation not to put himself or herself in a position of conflict of interests. But there are numerous examples of the Crown exercising different powers in different capacities. A fiduciary obligation on the Crown does not limit the legislative power of the Queensland Parliament, but legislation will be a breach of that obligation if its effect is adverse to the interests of the titleholders, or if the process it establishes does not take account of those interests.
Interim Summary
It is convenient at this point to summarize the conclusions so far reached in this judgment. They are that the traditional title of the Meriam people survived the annexation of the Islands; that the title is capable of extinguishment by clear and plain legislation or by an executive act authorized by such legislation; that extinguishment would involve a breach of a fiduciary obligation owed by the Crown to the Meriam people; but that extinguishment of that title has not occurred. These conclusions accept what are the primary aspects of the plaintiffs’ case. It should be noted that the plaintiffs seek no more than recognition of a fiduciary duty or a trust; they do not ask the Court to spell out the consequences of a breach of that duty or trust. In particular they do not seek compensation or consequences of a breach of that duty or trust. In particular they do not seek compensation or damages in respect of any past interference with the rights and interests of the Meriam people in the Islands. Whether there should be a declaration, even on the terms sought, depends in part upon the operation of the Racial Discrimination Act [1975 (Cth)]. I shall explain what I mean by this later. It is convenient at this point to turn to the other form of title claimed by the plaintiffs.
1. From where did Toohey J derive the fiduciary relation and ascertain its scope? In so doing, did his Honour go further than the Canadian cases, in which the fiduciary obligations were derived from express undertakings? Consider in this respect the remarks of Lehane J in Bodney v Western Airports Corporation Pty Ltd (2000) 109 FCR 178 at 201, 202:
Two aspects of the later Canadian cases relied upon caution in their use as authority directly applicable in Australia. One is the extent to which they depend upon a construction of particular statutes, most importantly s 35(1) of the Constitution Act 1982 (Can). That section provides that the existing aboriginal and treaty rights of the Aboriginal peoples of Canada are thereby recognised and affirmed … [I]t is evident that the “constitutionalisation” of Aboriginal rights has had a significant influence on judicial decisions … [T]he other aspect of them which requires caution in their use as authority here [is that] [t]he law as to fiduciary obligations has developed in Canada in ways which are not reflected in developments in Australian law …
2. Toohey J characterised the fiduciary obligation as akin to that of a constructive trustee. Does this mean that the Crown is subject to the strict duties of a private trustee, or do these duties need to be modified by virtue of the “public trust” in issue? Assuming that the Crown is a constructive trustee, upon what basis is constructive trusteeship imposed? In this context, consider the following remarks of Deane and Gaudron JJ in Mabo regarding the usefulness of the remedial constructive trust in the circumstances (at 113):
Notwithstanding their personal nature and their special vulnerability to wrongful extinguishment by the Crown, the rights of occupation or use of common law native title can themselves constitute valuable property. Actual or threatened interference with their enjoyment can, in appropriate circumstances, attract the protection of equitable remedies. Indeed, the circumstances of a case may be such that, in a modern context, the appropriate form of relief is the imposition of a remedial constructive trust framed to reflect the incidents and limitations of the rights under the common law native title. The principle of the common law that the pre-existing native rights are respected and protected will, in a case where the imposition of such a constructive trust is warranted, prevail over other equitable principles or rules to the extent that they would preclude the appropriate protection of the native title in the same way as that principle prevailed over legal rules which would otherwise have prevented the preservation of the title under common law. In particular, rules relating to requirements of certainty and present entitlement or precluding remoteness of vesting may need to be adapted or excluded to the extent necessary to enable the protection of the rights under the native title.
(emphasis supplied)
In what circumstances might constructive trusteeship be an appropriate form of relief ?
3. From the early 19th century, the Supreme Court of the United States has held that a fiduciary relationship exists between the United States government and the various Indian tribes. This relationship derives from the fact that the Indian tribes, as “domestic dependent nations” rather than individuals abandoning their national character and submitting as subjects to the laws of another, have sought and received the protection of a more powerful government, namely that of the United States. Accordingly there arose between the Indian tribes, as separate domestic dependent nations with their own limited form of sovereignty and territorial and governmental integrity, the protection being undertaken by the United States government either pursuant to legislation or otherwise. See Mabo at 164-165 per Dawson J (see also Bodney v Westralia Airports Corporation Pty Ltd (2000) 109 FCR 178 at202-203 per Lehane J). Dawson J, however, was in dissent in Mabo, for he found that upon annexation the Murray Islands became Crown lands and the Crown asserted the right to deal with those lands unimpeded by any recognition of, or acquiescence in, native title. Having so found, there was no room for the application of any fiduciary or trust obligation, which was dependent on the existence of some sort of aboriginal interest existing in or over the land (at 166-167).
4. Clearly all citizens are vulnerable to the power of the government, for the very fact of government dictates that citizens have ceded some autonomy. Is there any basis for the recognition of a fiduciary relationship between the government and the governed? What are the difficulties in applying private trust concepts to the government-citizen relationship? For a discussion of these issues in the context of electoral promises, see Dal Pont, “An Ethical Framework for Governmental Responsibility to the Electorate” (1994) 10 QUTJL 1. In another context, consider Larozo v Ontario (2005) 257 DLR (4th) 761, where the family of a nurse who died from exposure to SARS during her work claimed damages from the provincial Crown for, inter alia breach of fiduciary duty for failing to ensure the nurse’s health and safety. Cullity J struck out the fiduciary claim, reasoning as follows (at [16]):
A conclusion that a fiduciary relationship existed between the Crown and the plaintiffs because of a duty of the Ministry to protect the health of Ontarians would not distinguish the position of the plaintiffs from any other residents in the Province, or the position of the Crown and residents under any other statutes conferring powers, or imposing duties, to be exercised in the public interest. Although the importance of the concept of vulnerability has been emphasised by some learned judges in the Supreme Court of Canada … every member of the public is in a sense vulnerable to the exercise, or failure to exercise statutory powers and duties conferred, or imposed, on Ministers in the public interest. By itself this is insufficient to create a fiduciary relationship- giving rise to enforceable fiduciary rights and duties – between the Crown, or Ministers, and residents of the Province. Nor do I believe the line between duties of care in negligence and fiduciary duties is crossed by the fact that nurses … could be considered to have been in the frontline of the SARS emergency.
5. A leading commentator has said: “The trust given to our officials, elected and non-elected alike, is not without its corresponding burden: accountability to the public is the obligation of all who hold office or employment in our governmental system. That obligation is, in part, a direct product of our commitment to representative democracy, in part, the essential correlative of our devolution of public power to institutions and officials”: Finn, “Public Trust and Public Accountability” (1994) 3 Griffith L Rev 224 at 233-234. Is the fiduciary concept in public law best viewed in terms of accountability? If this is so, what does accountability require of government?
[5.40] Wik Peoples v Queensland (1996) 187 CLR 1 (High Court of Australia)
[The case involved a native title claim by the appellants in respect of land over which the Crown had granted a pastoral lease pursuant to its power to do so under, inter alia, the (since repealed) Land Act 1910 (Qld).]
BRENNAN CJ … [95] … The Wik and Thayorre submissions assert the existence of a fiduciary duty owed by the Crown to the indigenous inhabitants of the leased areas. The duty is said to arise from the vulnerability of native title, the Crown’s power to extinguish it and the position occupied for many years by the indigenous inhabitants vis-á-vis the government of the state. These factors do not by themselves create some free-standing fiduciary duty. It is necessary to identify some action or function the doing or the performance of the function, must be capable of affecting the interests of the beneficiary and the fiduciary must have so acted that it is reasonable for the beneficiary to believe and expect that the fiduciary will act in the interests of the beneficiary (or, in the case of a partnership or joint venture, in the common interest of the [96] beneficiary and fiduciary) to the exclusion of the interest of any other person or separate interest of the beneficiary.
In the present case the only relevant function performed by the Crown is the exercise of power of alienation. That is the only power the exercise of which relevantly affects native title. With all respect for the opposing view, I am unable to accept that a fiduciary duty can be owed to the Crown to the holders of native title in the exercise of a statutory power to alienate land whereby their native title in or over that land is liable to be extinguished without their consent and contrary to their interests.
The exercise of statutory powers characteristically affects the rights or interests of individuals for better or worse. If the exercise of a discretionary power must affect adversely the rights or interests of individuals, it is impossible to suppose that the repository of the power shall so act that the beneficiary might expect that the power will be exercised in his or her interests. The imposition on the repository of a fiduciary duty to individuals who will be adversely affected by the exercise of the power would preclude its exercise. On the other hand, a discretionary power – whether statutory or not – that is conferred on a repository for exercise on behalf of, or for the benefit of, another or others might well have to be exercised by the repository in the manner expected of a fiduciary. Thus in Guerin v The Queen (1984) 13 DLR (4th) 321 [extracted at [5.10]], the Crown accepted a surrender by an Indian band of native title to land in order that the land be leased by the Crown to a third party. The statutory scheme which provided for the surrender to the Crown and its subsequent dealing with the land imposed on the Crown the duty to act “on the band’s behalf”, as “the appointed agent of the Indians … and for their benefit” or for their “use and benefit” …
[97] … The power of alienation conferred on the Crown by s 6 of the 1910 Act is inherently inconsistent with the notion that it should be exercised as agent for or on behalf of the indigenous inhabitants of the land to be alienated. Accordingly, there is no foundation for imputing to the Crown a fiduciary duty governing the exercise of the power. This conclusion precludes the acceptance of a further submission made on behalf of the Wik and Thayorre Peoples. That submission sought to impose a constructive trust in their favour of the Crown’s reversionary interest in the leased land. If the constructive trust be viewed as a remedial institution, as Deane J viewed it in Muschinski v Dodds (1985) 160 CLR 583 at 614, it is nevertheless available “only when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles” (at 615). Given that no fiduciary duty was breached by the Crown in issuing the pastoral leases under s 6 of the 1910 Act and that the issue of those leases destroyed native title, there is no principle of law or equity which would require the imposition of a constructive trust on the reversion to restore what the holders of native title had lost.
In view of the observations of Brennan CJ in Wik, coupled with the decision of the High Court in Breen v Williams (1996) 186 CLR 71 (extracted at [4.10]), what scope remains for the argument that the Crown owes fiduciary duties to aboriginal persons? In what ways, if any, can fiduciary duties apply in this context? Would an Australian court follow Guerin v The Queen (1984) 13 DLR (4th) 321 (extracted at [5.10]) if faced with similar facts? Is it true to say that “whether a fiduciary duty is owed by the Crown to the indigenous peoples of Australia remains an open question” (Thorpe v Commonwealth (No 3) (1997) 71 ALJR 767 at 776 per Kirby J)?

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