The principle of the honour of the Crown applies to Quebec's contract with the community, court says
Quebec breached the principle of good faith and its obligation to honour the Crown when it refused to renegotiate its financial contribution to an Indigenous police force, the Supreme Court of Canada ruled in an 8-1 decision on Wednesday.
The court ordered Quebec to pay more than $767,000 to Sécurité publique de Mashteuiatsh, the police force of the Pekuakamiulnuatsh First Nation, to help offset the operating deficit the police force incurred between 2013 and 2017 due to lack of government funding.
“Quebec should have entered into genuine negotiations with its counterparty and should have listened and shown openness,” SCC Justice Nicholas Kasirer wrote for the majority.
“The absence of genuine negotiations left Pekuakamiulnuatsh Takuhikan in a no-win situation: either it continued to impoverish itself to maintain the SPM and preserve the progress that the SPM represented in terms of self-government, or it abolished the SPM, which meant both returning to the inadequate services of the Sûreté du Québec and suffering a setback with respect to self-government.”
Justice Suzanne Côté dissented.
Since 1996, the government of Canada, Quebec, and Pekuakamiulnuatsh Takuhikan, the band council that represents the Pekuakamiulnuatsh First Nation, have been part of a series of tripartite agreements to maintain a police force servicing the Indigenous community in the Mashteuiatsh region. The agreements, renewed periodically, cap the amount of funding Canada and Quebec provide to the police force and stipulate that the band is responsible for any deficits the police force incurs.
In 2014, SPM’s expenses rose substantially when an arbitration award required Pekuakamiulnuatsh Takuhikan to give police officers a retroactive pay increase of $853,000. Between 2013 and 2017, the police force incurred a deficit of nearly $1.6 million.
Pekuakamiulnuatsh Takuhikan brought legal proceedings against Canada and Quebec, arguing that the governments should help with its deficit. The band council alleged that Canada and Quebec had refused to negotiate the funding clauses of the tripartite agreements. This refusal, the band council said, breached the requirements of good faith and the obligations flowing from the honour of the Crown.
A trial judge dismissed Pekuakamiulnuatsh Takuhikan’s application, ruling that the parties’ contract, with its funding cap, applies. The judge also said the honour of the Crown was not applicable in the case.
The Court of Appeal of Quebec disagreed, finding that the governments’ refusal to fund the SPM violated the principle of good faith and failed to uphold the honour of the Crown. The appellate court ordered both governments to reimburse the band council, and Canada complied. Quebec appealed the ruling to the SCC.
In its decision Wednesday, the SCC majority agreed with the Court of Appeal of Quebec. Kasirer wrote that the parties had asked the high court to clarify several issues: how does the general law of obligations, mainly set out in the Civil Code of Québec, apply to contracts between the state and an Indigenous community?
The parties also asked the court to outline, for the first time, a methodology for determining whether a government’s contractual undertakings with an Indigenous community are subject to the principles of Aboriginal law, including the honour of the Crown.
The court noted that the two issues are respectively based in private and public law.
The majority found that by refusing to renegotiate funding when the agreement between Pekuakamiulnuatsh Takuhikan, Canada, and Quebec was being renewed, Quebec breached the principle of good faith in a contractual context– a private law obligation under the Civil Code of Québec.
Noting that Quebec knew “the police force was underfunded and that a return to the services of the Sûreté du Québec would involve risks for the community,” the majority called Quebec’s refusal to negotiate “intransigent behaviour.”
The SCC said that, unlike the principle of good faith, the honour of the Crown principle does not apply to every contract. Noting that the principle stems from “the sui generis relationship between the Crown and Indigenous peoples,” the majority said it is “anchored to the goal of reconciliation.” Thus, the principle only applies to contractual relationships between the state and Indigenous groups, the SCC said.
Regarding the question of whether Quebec’s contract with the Pekuakamiulnuatsh Takuhikan is subject to the principle of the honour of the Crown, the SCC ruled that when a contractual obligation is not constitutional in nature, it “may engage the honour of the Crown when it is related to Indigenous difference and it concerns a credible claim by the Indigenous creditor to a right of self-government.”
In this case, the tripartite agreements “relate to a credible, albeit not yet established, claim to the right of self-government in matters of policing,” the majority said. Quebec was, therefore, required to conduct itself according to the principle of the honour of the Crown, and its “obstinate refusal to genuinely renegotiate the contract’s funding terms is not only a breach of the requirements of good faith but also a breach of the obligation to act in a manner consistent with the honour of the Crown,” the SCC added.
However, the SCC declined to order damages for the good faith violation because the court did not have sufficient evidence to assess the right amount properly.
The high court ordered Quebec to pay damages for the honour of the Crown breach, totalling the deficit Pekuakamiulnuatsh Takuhikan alleged the government owed.
In her dissent, Côté said she would have allowed Quebec’s appeal and restored the trial court’s judgment.
“In this case, Quebec undertook to contribute financially to the establishment and maintenance of the Sécurité publique de Mashteuiatsh through maximum financial contributions expressly agreed to by the parties,” Côté wrote. “Quebec did not undertake to pay all of the costs incurred, or to fund services equal to those provided in communities in the region.
“It is in light of the scope of this undertaking that Quebec’s conduct toward Takuhikan must be assessed,” she wrote.
Benoît Amyot, a partner at Cain Lamarre LLP who represented Pekuakamiulnuatsh Takuhikan, told Canadian Lawyer on Wednesday that the SCC’s decision clarified the scope of the honour of the Crown principle.
“Quebec was saying that, since we have a contract, and since it is not a recognized constitutional right for the Pekuakamiulnuatsh to have police services, the honour of the Crown shouldn't apply,” Amyot says. “And the court says that it's not true, so [the SCC] created the criteria to know when the honour of the Crown should apply, and it's larger than what Quebec thought.
“The honour of the Crown applies in many, many contractual contexts, not only for policing services,” he says. “Whenever the government – federal or provincial – from now on will be dealing with First Nations concerning self-government… or funding for any kind of public services given to their citizen or members, it will be under the honour of the Crown.”
Amyot adds that Pekuakamiulnuatsh Takuhikan is very happy with the result, “but at the same time, it's sad to consider that it took eight years of judicial battles to get that result.
“We are aware that many First Nations communities are not able to have those kinds of battles for eight years,” he says.
The Ministre de la Justice du Québec declined to comment. The Ministère de la Sécurité publique did not respond to a request for comment.
