[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.
GUERIN V THE QUEEN
[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.
[5.15] NOTES & QUESTIONS
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)
[5.25] NOTES & QUESTIONS
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).
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.
[5.35] NOTES AND QUESTIONS
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?
WIK PEOPLES V QUEENSLAND
[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.
[5.45] QUESTIONS
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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