Ermineskin Indian Band & Nation v. Canada
Court: Supreme Court of Canada
Citation: 2009 SCC 9
TAGS: Fiduciary Duty; Natural Resources – Oil and Gas; Investment of Royalties
The law regarding the Crown’s fiduciary obligations to Indigenous Nations is complex. This case highlights a few aspects of that law.
The Crown retained oil and gas royalties received on behalf of the Ermineskin Indian Band and Nation in the Consolidated Revenue Fund and credited interest to the Ermineskin Indian Band using a formula based on the market yield of long-term government bonds.
Ermineskin Indian Band and Nation claim that the Crown breached its fiduciary obligations by not investing the royalties in a diversified portfolio as a prudent investor would or, if not that, by the manner the Crown calculated and paid interest. Ermineskin Indian Band and Nation state that the money they should have received has been reduced by hundreds of millions of dollars since 1972 due to the Crown’s breach of its fiduciary obligations. Ermineskin Indian Band and Nation also argue that the Crown is in a conflict of interest as a fiduciary by borrowing the royalties without permission with the borrowing leading to unjust enrichment of the Crown. Furthermore, Ermineskin Indian Band and Nation argue that if ss. 61-68 of the Indian Act preclude the Crown from investing royalties, those Indian Act provisions infringe their right to equality under s.15 of the Canadian Charter of Rights and Freedoms.
The Crown does have fiduciary obligations regarding the Ermineskin Indian Band’s royalties. However, the Supreme Court of Canada held that the Crown does not have a fiduciary obligation to invest their royalties. The Supreme Court of Canada held in Guerin v R ( 2 S.C.R. 335) and Authorson (Litigation Guardian of) v Canada (Attorney General) (2003 SCC 39) that valid legislation can constrain or eliminate the Crown’s fiduciary duties. The Court found that valid legislation requires the Crown to hold the band royalties in the Consolidated Revenue Fund and that the Crown was not unjustly enriched because it could have obtained replacement funds at a lower cost if it had not had access to the royalties. The Supreme Court of Canada held that s.15 of the Charter was not violated by the provisions of the Indian Act that prohibit investment of the royalties by the Crown because those provisions do not draw a distinction that perpetuates disadvantage through prejudice or stereotyping.
Why this Case Matters:
Ermineskin Indian Band & Nation v. Canada illuminates the law regarding the fiduciary obligations of the Crown towards Indigenous Nations. If fiduciary obligations are not protected by the Constitution, they can be constrained by valid legislation. The Crown must comply with valid legislation even if the Crown derives benefits through complying. There is no ongoing fiduciary obligation to an Indigenous Nation for an asset of which the Crown has transferred discretionary control to that Indigenous Nation. Therefore, the Crown must take care to ensure that transferring the asset is in the best interest of the Indigenous Nation before the Crown transfers the asset.
Supreme Court Judgment: