Introduction
The Supreme Court of Canada (SCC) recently released a decision in Quebec (Attorney General) v. Pekuakamiulnuatsh Takuhikan regarding contractual agreements between Indigenous governments and the Crown. The Court found that when the Crown enters into a contract with an Indigenous government, the Honour of the Crown may be engaged. The engagement of Honour of the Crown in private contracts is a new recognition in Canadian law.
The Facts
Pekuakamiulnuatsh Takuhikan first entered a policing agreement with Quebec and Canada in 1996 and have entered into subsequent agreements since. This tripartite agreement resulted from Canada’s First Nations Policing Program (FNPP) and Quebec’s amendments to the Police Act, both supporting Indigenous governments with establishing their own police forces in their communities. The Crown provided funding for Pekuakamiulnuatsh Takuhikan’s police force while the First Nation was responsible for the management and administration.
Beginning in 2013, funding from the Crown wasn’t enough for Pekuakamiulnuatsh Takuhikan to operate its police force. The First Nation repeatedly advised Quebec and Canada about insufficient funding. They wanted to negotiate the amount they were receiving from the governments, but Canada and Quebec refused. This left Pekuakamiulnuatsh Takuhikan no choice but to continue funding its police force, racking up $1.6 million in debt and taking the Crown to court because of it.
The Case
There were two main arguments that Pekuakamiulnuatsh Takuhikan brought forward in their case about the Crown not negotiating and providing more funding for the First Nation’s police force:
- (1) There was a breach of good faith in private law under the Civil Code of Quebec, which governs contractual agreements in Quebec. Pekuakamiulnuatsh Takuhikan argued that, because there was a renewal mechanism in their tripartite agreement, the Crown did not act in good faith when the First Nation requested to negotiate the amount of funding they receive for the police force; and,
- (2) There was a breach in the Honour of the Crown, a public law principle, which generally governs the Crown’s relationship with Indigenous governments across the country. The Crown needs to act honourably when Indigenous claims, rights, and interests are affected by the Crown’s decisions. Pekuakamiulnuatsh Takuhikan’s litigation was the first case to go to the SCC that argued that contractual agreements between the Crown and Indigenous governments should engage the Honour of the Crown.
When Pekuakamiulnuatsh Takuhikan’s case went to the Quebec Superior Court, it was dismissed. The trial court decided that there was neither a breach of good faith nor the Honour of the Crown. Pekuakamiulnuatsh Takuhikan appealed and received a favourable decision from the Quebec Court of Appeal, who found that there were breaches in both good faith of the contract and the Honour of the Crown, resulting in a reimbursement of the cumulative deficits. Canada agreed with this decision by the appeal court but Quebec appealed, which brought the case to the Supreme Court of Canada (SCC).
The Decision
Private Law Good Faith
The SCC decided that there was a clear violation of good faith from Quebec. The obligations of good faith to all contracts, including those entered into by the Crown, arise from the Civil Code of Quebec. The requirement of good faith is not one which dictates an outcome but rather requires conduct in line with good faith.
In this case, the province should have entered into negotiations with Pekuakamiulnuatsh Takuhikan when requested, especially with a renewal mechanism in the tripartite agreement. The Court stated that good faith in private law may include a consideration of the interests of Indigenous governments during negotiations when entering into an agreement with the Crown.
Public Law Honour of the Crown
The decision found that the Honour of the Crown can be engaged in contracts between the Crown and Indigenous governments. The SCC wrote this in the introduction of its decision:
“The honour of the Crown requires the Crown to meaningfully engage in genuine negotiations in a manner conducive to maintaining a relationship that can support the ongoing process of reconciliation. By refusing to renegotiate the level of funding despite Pekuakamiulnuatsh Takuhikan’s repeated complaints and the precarious situation in which it found itself, Quebec conducted itself in a manner that fell well below the standard of honourable conduct.”
The SCC went on to specify when the Honour of the Crown may apply to contracts with Indigenous governments. The Honour of the Crown may apply when the Crown needs to foster reconciliation between them and an Indigenous government, whether it be in the form of legislation or private contracts.
In considering how the Crown must act to fulfill the Honour of the Crown, there was specific emphasis on power imbalances and avoiding “sharp-dealing” during renegotiations, which is seen when the Crown attempts to coerce an Indigenous government to sign to an outcome they don’t want while not being genuine and open to such a party’s interests and concerns. The negotiations should be something that fosters reconciliation, not something that damages the special relationship between Indigenous governments and the Crown.
Remedies flowing from both breaches in private and public law required a complex discussion at the SCC. The Court noted that, while declaratory relief is often viewed as the preferred relief in matters of reconciliation (as seen with Jim Shot Both Sides v. Canada), compensation can be appropriate. They ultimately decided that, since Pekuakamiulnuatsh Takuhikan wanted financial compensation from the beginning, the appeal court’s remedy was appropriate, but other cases should consider what Indigenous governments want as opposed to restrictive compensation.
Discussion
Pekuakamiulnuatsh Takuhikan’s case is complex and has several interesting elements to it. It’s great the SCC is forcing the Crown to honour their agreements made regarding Indigenous self-governance mechanisms and it gives Indigenous governments better balance in agreements they have with the Crown.
The most exciting aspect of the case is how the Honour of the Crown now applies to contractual agreements. This only affects self-governing agreements at the moment, but the SCC left the door open for Indigenous governments to take this further. Future negotiations and litigation for different types of agreements could engage the Honour of the Crown, bringing reconciliation as a legal mechanism in those agreements.
Sources:
AFN. (2024, November 28). Assembly of First Nations (AFN) Welcomes Supreme Court Decision to Uphold Obligations and Compensate Pekuakamiulnuatsh First Nation for Police Services. https://afn.ca/all-news/press-releases/assembly-of-first-nations-afn-welcomes-supreme-court-decision-to-uphold-obligations-and-compensate-pekuakamiulnuatsh-first-nation-for-police-services/#:~:text=The%20ruling%20affirms%20that%20the,to%20sustain%20its%20police%20force.
Churchill, M., & Lansdell, B. (2024, November 28). Supreme Court of Canada Confirms Crown-Indigenous Contracts Can Engage the Honour of the Crown: Quebec (Attorney General) v. Pekuakamiulnuatsh Takuhikan, 2024 SCC 39. JFK Law. https://jfklaw.ca/supreme-court-of-canada-confirms-crown-indigenous-contracts-can-engage-the-honour-of-the-crown-quebec-attorney-general-v-pekuakamiulnuatsh-takuhikan-2024-scc-39/
Quebec (Attorney General) v. Pekuakamiulnuatsh Takuhikan, 2024 SCC 39. https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/20755/index.do.
