Tsilhqot’in case: What it means for resource development in Ontario

On June 26, 2014, the Supreme Court of Canada released its decision in the Tsilhqot’in Nation v. British Columbia case (2014 SCC 44). The Supreme Court of Canada upheld the B.C. trial judge’s findings on aboriginal title and granted aboriginal title to 2% of the Tsilhqot’in Nation traditional territory. This is the first decision in Canada granting aboriginal title. 

Background

The Tsilhqot’in Nation commenced an action in B.C. claiming, among other things, aboriginal title to a large tract of land representing 5% of its traditional territory. The Tsilhqot’in Nation was a semi-nomadic aboriginal grouping of six bands which shared a common culture and history. The people of the Tsilhqot’in Nation lived in mountain villages. Within their traditional territory they hunted, trapped and collected roots and herbs. Approximately 200 Tsilhqot’in Nation members still live in the area.

After 339 days of trial over five years, and having heard voluminous evidence from Tsilhqot’in Nation elders, historians and other experts, the trial judge found that aboriginal title was proven for 190,000 hectares (1,900 sq. km). The trial judge ruled, however, that because the action was pleaded as an “all-or-nothing” proposition and aboriginal title was not established over the entire claim area, the court could not make a declaration of aboriginal title.

The British Court of Appeal overruled the trial judge by finding that the action was pleaded sufficiently to permit the court to declare aboriginal title to less than the full area claimed. Unlike the trial judge, however, the appeal court found that aboriginal title had not been established. The Supreme Court of Canada disagreed.

Test for aboriginal title

The test for aboriginal title was established by the Supreme Court of Canada in the 1997 case Delgamuukw v. British Columbia. The test has three components: the land must have been occupied prior to sovereignty; if present occupation is relied on as proof of occupation pre-sovereignty, there must be a continuity between present and pre-sovereignty occupation; and at sovereignty, that occupation must have been exclusive.

In the Tsilhqot’in Nation case, the Supreme Court stated that the concepts of sufficiency, continuity and exclusivity as the elements of the test are “useful lenses through which to view aboriginal title (para. 32)” and should not be considered independently. Throughout the Court’s decision, there is an expressed recognition that the aboriginal perspective is important and cannot be lost or distorted “by forcing it into common law concepts (para. 32).”

The most significant finding of the Supreme Court as it relates to the concept of occupation is that occupation is “territorial,” not “site specific.” It was in this fundamental respect that the Supreme Court differed with the British Columbia Court of Appeal. A “territorial” approach permits an Aboriginal group’s regular use of land for harvesting to constitute sufficient physical possession to establish aboriginal title. The implication is that, in most cases, aboriginal title will extend to a broader area than would have been the case with a site-specific approach. In all aspects of the occupation test, context matters and context will include an examination of not only the characteristics of the aboriginal group making the aboriginal title claim, but the character of the land over which title is claimed (para. 37). Ultimately, whether aboriginal title is established is a matter of evidence.

It should be noted that, before the Supreme Court of Canada, the plaintiff did not seek a declaration of aboriginal title over any privately held lands, although a small area of private lands was considered proven by the trial judge. There were no adverse claims for aboriginal title in these lands by any other aboriginal group. 

Aboriginal title

Aboriginal title grants the title holding group the right to “the benefits associated with the land — to use it, enjoy it and profit from its economic development (para. 70).” The aboriginal title holders’ right to decide how the land will be used, managed and controlled is subject to two specific restrictions: that the use and development of the land subject to aboriginal title must not prevent future generations of the group from using and enjoying the land, and that the title holders must give consent for others to use the land, unless the government can justify an infringement of the aboriginal title-holding group’s wishes.

The first constraint arises from the communal nature of the (group) title, which is held for all succeeding generations. The second recognizes that there must be a balancing of interests in order to reconcile the prior occupation in North America by Aboriginals with Crown sovereignty.

Implications in Ontario

Treaty Challenges

Unlike in B.C., most of Ontario is covered by treaties. Pursuant to the Ontario treaties, First Nations surrendered to the Crown any rights and interests in lands in exchange for a reserve and other items. Typically, the First Nations retained their ability to harvest on the surrendered lands except to the extent that such lands were taken up for settlement, mining and other purposes. For example, Treaty 9 states as follows:

“And whereas, the said commissioners have proceeded to negotiate a treaty with the Ojibeway, Cree and other Indians, inhabiting the district hereinafter defined and described, and the same has been agreed upon, and concluded by the respective bands at the dates mentioned hereunder, the said Indians do hereby cede, release, surrender and yield up to the Government of the Dominion of Canada, for his Majesty the King and His successors for ever, all their rights titles and privileges whatsoever, to the lands included within the following limits …”

“And His Majesty the King hereby agrees with the said Indians that they shall have the right to pursue their usual vocations of hunting, trapping and fishing throughout the tract surrendered as heretofore described, subject to such regulations as may from time to time be made by the government of the country, acting under the authority of His Majesty, and saving and excepting such tracts as may be required or taken up from time to time for settlement, mining, lumbering, trading or other purposes …” (Emphasis added.) 

The “Ring of Fire” falls within Treaty 9.

It is reasonable to expect that the Ontario treaties will be challenged by First Nations in order to put themselves in a position to claim aboriginal title and obtain the significant benefits that flow from the establishment of such title. For example, there is current litigation in which the First Nation plaintiff seeks court declarations that the government cannot extinguish harvesting rights by taking up the land for mining, etc., pursuant to Treaty 9, because it says that it has evidence that First Nation signatories were misled by government negotiators. However, given the language in the treaties, the equitable doctrine of laches and difficult evidentiary issues, any challenge to an Ontario treaty will face significant obstacles.

Infringing aboriginal title

Even if aboriginal title was established for a certain tract of land, provincial general regulatory legislation (such as the Environmental Protection Act) will apply since the government has the power to regulate land use with
in the province whether such land is held by the Crown, private owners or the holders of aboriginal title.

As indicated above, the government also can infringe on aboriginal title where such infringement can be justified on the basis of the “broader public good.” This justification requires that the government discharge its procedural duty to consult and accommodate respecting the proposed legislation; the infringement is backed by a compelling and substantial legislative objective and in the public interest; and the infringement is consistent with the fiduciary obligation owed by the Crown, that is, the benefit to the broader public interest must be proportionate to any adverse effect on the aboriginal title-holding group’s interest (para. 77). The justified infringement test is often referred to as the “Sparrow test,” based on the 1990 Supreme Court of Canada case R. v. Sparrow. The consultation aspect is a more recent component also arising from Supreme Court jurisprudence.

In Tsilhqot’in Nation, Chief Justice Lamer’s statement in Delagamuukw is quoted with approval:

“… In my opinion, the development of agriculture, forestry, mining and hydroelectric power, the general economic development of the interior of B.C., protection of the environment or endangered species, the building of infrastructure and the settlement of foreign populations to support those aims, are the kinds of objectives that are consistent with this purpose [reconciliation] and, in principle, can justify the infringement of aboriginal title.”

Although not part of the binding decision, the court observed that it will be difficult to justify infringements that transfer aboriginal property rights (e.g., the right to extract minerals) to third parties. If not justifiable, then consent of the aboriginal title-holding group would be required.

Retroactive Veto

Arguably, the most troublesome aspect of the Supreme Court of Canada’s decision for resource companies operating in Ontario relates to consultation. It is well established that the Crown’s duty to consult Aboriginal Peoples arises from the honour of the Crown and is triggered when the Crown has real or constructive knowledge of the potential or actual existence of aboriginal title, and contemplates conduct that- might adversely affect it.

The level of consultation required is proportionate to the strength of the claim and to the seriousness of the adverse impact the contemplated government action would have on the claim of aboriginal title. Further, the level of consultation and accommodation owed by the Crown is highest where aboriginal title is established. In the Tsilhqot’in decision, the Supreme Court of Canada stated as follows:

“Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward. For example, if the Crown begins a project without consent prior to aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing (para. 92).”

On its face, this appears to provide to the aboriginal title-holding group a retroactive “veto.” Although this issue was not strictly part of the Supreme Court’s ruling, these comments may be viewed as imposing significant increased risk for companies who wish to develop a mining project on lands where aboriginal title is, or may be, claimed. At a minimum, this enhanced uncertainty may disincentivize global private-equity funds and other international investors from financing large resource projects in Ontario.

Section 86.1 of the Mining Act is also significant in the context of the Tsilhqot’in Nation decision. Section 86.1 came into force on October 28, 2009, and provides as follows:

“Every lease issued under this Act including leases issued or renewed before the enactment of this section shall include or be deemed to include the following provision: The Lessee’s rights under this lease are subject to the protection provided for existing aboriginal or treaty rights in Section 35 of the Constitution Act, 1982, and the Lessee shall conduct itself on the demised premises in a manner consistent with the protection provided to any such rights.”

The laches principle provides that claims must be brought before the court within a reasonable amount of time. In its decision in 2000 in Chippewas of Sarnia Band v. Canada (Attorney General) the Ontario Court of Appeal found, in that case, that aboriginal rights were subject to laches. By virtue of Section 86.1, however, the Ontario Crown has put mining companies on “notice” of aboriginal title claims. This makes it difficult for a mining company to rely on laches and limitation defences in the event that aboriginal title is established for the land on which the project exists and the provincial government decides to cancel the project.

Agreements with aboriginal communities

Most resource companies exploring and operating in Ontario engage and build relationships with all stakeholders to their projects including aboriginal communities. As time goes on, more companies are negotiating commercial agreements with First Nations to provide greater certainty and less risk to investors that the First Nation stakeholders will support the project.

Nevertheless, it is not always possible, or easy, to negotiate commercially reasonable and appropriate agreements for a number of reasons, including assertions of sovereignty, unreasonable expectations at the early stages of a project and multiple First Nations asserting rights and seeking financial benefits. The Supreme Court’s recent decision will provide further incentive for companies to have agreements in place that provide First Nation consent for a project on a long-term basis.

— A partner at Fasken Martineau DuMoulin LLP’s Toronto office, Tracy A. Pratt has a diverse litigation practice encompassing complex commercial and corporate litigation, securities litigation, corporate crime and aboriginal law. She regularly advises clients in the mining, oil and gas, energy and forestry industries, land developers and municipalities respecting aboriginal and treaty rights, government obligations respecting the duty to consult and the legal and practical requirements of consultation.

— Also a partner at Fasken’s Toronto office, Neal J. Smitheman practises both civil and criminal litigation. As the Chair of the Toronto Aboriginal Law Practice Group, he is called upon to advise and represent clients in this burgeoning legal specialty. He is currently representing several mineral companies, numerous municipalities and others in high-profile cases in Northern and Southern Ontario involving, among other things, significant land claims.

Visit www.fasken.com for more information.