Case Brief: Restoule v. Canada (Attorney General), 2018 ONSC 7701 (“Restoule”)
Restoule considers a clause in the Robinson Treaties of 1850 respecting the annuities to be paid, and whether they should be increased beyond the $4 per year set in the nineteenth century.
What the Case is About
On December 21, 2018, Justice Patricia Hennessy of the Ontario Superior Court of Justice released her ruling in Restoule.
The case was brought by the Anishinaabe of the upper Great Lakes region and arises out of two treaties signed in 1850: the Robinson Huron Treaty and the Robinson Superior Treaty (the “Robinson Treaties”). In the Robinson Treaties, the Crown agreed to pay to the Anishinaabe a combination of a lump sum payment together with a perpetual annuity, which was to be increased subject to certain conditions. The annuity clause found in those Treaties reads as follows:
The said William Benjamin Robinson, on behalf of Her Majesty, who desires to deal liberally and justly with all Her subjects, further promises and agrees that in case the territory hereby ceded by the parties of the second part shall at any future period produce an amount which will enable the Government of this Province, without incurring loss, to increase the annuity hereby secured to them, then and in that case the same shall be augmented from time to time, provided that the amount paid to each individual shall not exceed the sum of one pound Provincial currency in any one year, or such further sum as Her Majesty may be graciously pleased to order;…
Justice Hennessy refers to this as the “annuity augmentation clause.” Despite the annuity augmentation clause, the Crown had not increased the annuity since 1875, when it was set at $4 per person, prompting the Anishinaabe to file this suit.
The primary task for Justice Hennessy was to interpret the annuity augmentation clause in the Robinson Treaties and determine whether it expresses a mandatory or discretionary obligation on the Crown to increase the annuity in step with increases to revenues received from the territory.
The Anishinaabe argued that the parties entered into the Treaties with the common intention of sharing the wealth generated from the natural resource activities in the territory, and that the annuity augmentation clause was meant to implement this intention by allowing for the Crown to use its discretion to increase the annuity with the expansion of natural resource activities in the territory.
The Crown argued that the annuity augmentation clause is subject to a cap at $4 and that the Crown does not have a mandatory duty to increase the annuity further.
What the Court Found
Justice Hennessy reviewed in depth the evidence of Crown and Anishinaabe perspectives of the negotiation and signing of the Robinson Treaties. Hennessy J. found that the common intention of the parties was to share the wealth of the land and resources within the territory. The Crown was in a dire financial situation in 1850 and placed little value on the Great Lakes region and therefore offered to the Anishinaabe a considerably smaller payment than it had offered other First Nations in Ontario. The Anishinaabe were aware that the annuity payment was not as generous and only accepted this lower annuity payment in exchange for the Crown’s promise to increase, without limit, the collective annuities payable under the Treaty whenever the Crown could do so without incurring loss. The leadership of the Anishinaabe took the gamble that they would see the annuities increase if the territories became more profitable.
Justice Hennessy then addressed the degree of discretion the Crown should be entitled to in implementing the clause. The Robinson Treaties do not prescribe a protocol for implementing the promise to increase the annuities. By examining the principles of the Honour of the Crown, Hennessy J. found that an ad hoc fiduciary duty arises on the part of the Crown in this context. By promising to engage in a process to determine if the economic circumstances warrant an increase to the annuities, the Crown undertook to act exclusively in the best interest of the Robinson Treaties’ beneficiaries. As such, the Crown has a fiduciary duty to engage in a process to determine if the Crown can increase the annuities without incurring loss (based on a calculation of net Crown revenues). In engaging in that process, the Crown owes the Anishinaabe duties of loyalty, good faith, disclosure and consultation.
In sum, Justice Hennessy found that the Robinson Treaties provide the Anishinaabe with a constitutionally protected right to share in the Crown revenues from the territory. The Crown has a mandatory and reviewable obligation to increase the annuities when the economic circumstances warrant. Damages quantification will take place in a future phase of the trial.
Why This Case Matters
Canada has until January 20th to file a Notice of Appeal with the Ontario Court of Appeal. Canada will likely appeal. The financial implications of Restoule for Canada are likely significant. Recent decisions of the Specific Claims Tribunal have established that historic losses for breach of treaty rights attract equitable compensation, which can include compound interest. While not binding on the superior courts, those decisions may be persuasive.
Although most historic treaties make provision for the payment of annuities, not all have annuity augmentation clauses. What will be interesting to watch is whether First Nations with other treaty annuities explore how far Restoule may be used in their own cases to accelerate or augment those annuity payments beyond nineteenth century values into twenty-first century equivalents.