Canada: Alberta Court Of Queen's Bench Quashes Alberta's Refusal To Transfer Or Sell Subsurface Land Rights To A First Nation Band

Added to the growing list of recent court decisions on land claim issues between First Nations and provincial Crowns is the recent Alberta Court of Queen's Bench decision in Kainaiwa/Blood Tribe v. Alberta (Energy) 2017 ABQB 107 (Blood Tribe). In Blood Tribe, Jeffrey J. denied the Blood Indian Band's (the Band) request for mandamus on the grounds that Treaty 7, the Natural Resource Transfer Agreement, Schedule to the Constitution Act, 1930 (UK), 20 & 21 Geo V, c 26 (NRTA) and the honour of the Crown did not entitle the Band to subsurface rights on certain lands sought by the Band to be added to its reserve land. However, the Court did quash and send back for reconsideration the decision of the Alberta Minister of Energy to refuse to transfer or sell the subsurface rights to the Band. The Court held that the Minister's discretionary decision was unreasonable for a number of reasons, including deficiencies in the intelligibility and rationality of the decision and reasons.

Background Facts

Under the terms of Treaty 7 signed in 1887, the Band gained rights in certain lands known as the Blackfoot Crossing Reserve. Between 1880 and 1881, the Band was dissatisfied with the Blackfoot Crossing Reserve and agreed to surrender its rights in the Blackfoot Crossing Reserve in exchange for a new reserve that is currently occupies (the Reserve). While surveying the Reserve in 1882, the federal Crown became aware that a non-Indian man, David Akers (Akers), was living at its eastern extremity and in 1883, an Amended Treaty 7 was finalized. The federal Crown later discovered that several pieces of land within the Reserve was inadvertently sold to Akers. Akers refused to relocate and the federal Crown obtained a surrender of approximately 444 acres (the Claim Land) from the Band without compensation (the Surrender). In 1970 the federal crown reacquired and reincorporated 219 acres of the Claim Land into the Reserve. Approximately 225 acres of the Claim Land remained outstanding from the original Agreement.

In 1995, the Band submitted a claim alleging that it did not receive compensation for the Surrender, and that the Surrender was invalid. Negotiations resulted in two settlement Agreements, the first in 1997 (the 1st Akers Settlement) and the second in 2003 and 2004 (the 2nd Akers Settlement). Under the 1st Akers Settlement, the Band received $2,346,000 and the option of purchasing 444 acres to be added to its reserve land, provided that the Band consulted with the provincial government and the relevant interest holders and resolved any concerns that may arise. Under the 2nd Akers Settlement, in exchange for an absolute surrender of all of its interest in the Claim Land within the meaning of ss. 38 and 39 of the Indian Act, RSC 1985, c I-5 (the Indian Act), the Band received an additional $3,555,000 and the option of purchasing 225 acres of land adjacent to the Reserve, including subsurface rights, on a willing buyer/seller basis to be added to the Reserve subject to meeting the concerns of the provincial government. Under the 1st and 2nd Akers Settlements combined, the Band received $5,800,000 and the option of purchasing up to 669 acres that could be added to the Reserve.

In 2009, the Band purchased surface rights to 664.8 acres (the Purchased Lands). The subsurface rights remained vested in the Alberta Crown, portions of which were subject to coal, ammonite, oil and gas leases. From October 2008 to January 2015, the Band sought a transfer or sale from the Alberta Crown of the subsurface rights in the Purchased Lands. Initially, the Band was advised that Alberta was not willing to transfer Crown mineral rights except where required by law. Over the next several years, the Band was advised that the subsurface rights would not be transferred until the natural gas well ceased production. Alberta wanted compensation for the sub-surface rights and lost royalties. The Band accepted that it would be willing to purchase the subsurface rights, as opposed to receiving it from Alberta for free. Alberta's Minister of Aboriginal Relations advocated for the transfer of the subsurface rights to the Band while the Minister of Energy advocated against the transfer on the grounds that it would create a precedent for other First Nations purchasing land to seek similar concessions. In 2014, the Minister of Aboriginal Relations became the Minister of Energy, while the Premier took over the office serving as both Premier and the Minister of Aboriginal Relations. The new Minister of Energy changed his former position (when he was Minister of Aboriginal Relations) and advised the Premier that Alberta would not be transferring the subsurface rights to the Band on the grounds that: (1) there were existing subsurface rights in the Purchased Lands that were presently being leased, (2) Alberta does not sell subsurface rights except in exceptional cases, (3) Alberta did not have a legal obligation to transfer the subsurface rights in this case and (4) selling subsurface rights where no legal obligation exists may lead other First Nations to purchase land and seek similar treatment. In January 2015, the Band received a letter from Alberta's Minister of Energy pursuant to the powers under the Mines and Minerals Act R.S.A. 2000, c. M-17 (MMA) communicating his decision refusing the transfer or sale of the subsurface rights. Reasons for the decision were not provided in the letter. The Band commenced the application for mandamus and judicial review.

Issues

The Court considered three issues: (a) whether mandamus lay against the Minister of Energy; (b) if not, the applicable standard of review of the Minister's decision; and (c) whether the Minister's decision fell short of that standard of review.

Decision

On the first issue, the Court held that neither Treaty 7, the NRTA, nor the honour of the Crown entitled the Band to the subsurface rights underlying the Purchased Lands. Therefore the Minister was not under any legal obligation and could not be compelled by Mandamus to transfer or sell the subsurface rights to the Band. The Court reasoned that while Treaty 7 is constitutionally protected by section 35 of the Constitution Act, 1982, and the NRTA transferred land from the federal Crown to Alberta subject to any existing trusts, the Purchased Lands was never part of reserve land subject to these protections. Alberta received those subsurface rights from the federal Crown unencumbered by any obligation to the Band. The Court confirmed that the honour of the Crown is not a cause of action in itself, but speaks to how obligations that attract it must be fulfilled. Therefore in the absence of a legal obligation, the honour of the Crown could not compel Alberta to transfer the subsurface rights to the Band. The Court also found that the Band's absolute surrender of all of its interest in the Claim Lands under the 2nd Akers Settlement fulfilled Canada's treaty obligations, extinguished the Band's claim and completely bars mandamus.

On the second issue, the Court held that insofar as the Minister's decision entails extricable questions of constitutional interpretation, of an enactment (the NRTA) or an agreement (Treaty 7), or determining the scope of what is entailed by the honour of the Crown, the standard of review is correctness. However, the Minister's discretionary decision, pursuant to the MMA, to transfer or sell the subsurface rights owned by the Alberta Crown is subject to review on a reasonableness standard.

On the third issue, the Court held that the Minister of Energy was correct that there was no legal obligation on Alberta, pursuant to Treaty 7, the NRTA or the honour of the Crown, to sell or transfer the subsurface rights to the Band. However, the Court held the Minister's refusal to transfer or sell unreasonable from the combination of the diminished intelligibility and rationality of the decision and reasons and his failure to consider how his decision might affect the process of reconciliation between the Crown and Aboriginal peoples.

Given the absence of reasons in the decision letter, which made the task of determining the justification and intelligibility of the decision more challenging, the Court assessed reasonableness of the Minister's decision from the record. The Court found the reasons in the 2014 advice to the Premier from the Department of Energy. The Court held that the deficiencies in those reasons materially undermined a finding of the requisite intelligibility of the decision and its reasons, and sufficient rational connection between the reasons given and the outcome. The Court also confirmed that consideration of opportunities by decision makers to advance and promote the process of reconciliation between Aboriginal peoples and the Crown is constitutionally mandated by Section 35 of the Constitution Act, 1982. In this case, the Constitution required the Minister to consider whether, and if so how, his decision may advance or impair the ongoing process of reconciliation with the Band. The Court found that the Minister failed to undertake this mandatory consideration.

As it was not argued, the Court did not decide whether the honour of the Crown required reasons. However, the Court held in obiter that the honour of the Crown "prima facie" requires reasons in such circumstances where the Band perceived an injustice was done to them over a century ago, followed by its decades-long struggle for a remedy. Further, the fact that the Band's historic claim had some legitimacy given the magnitude of the federal Crown's payment in settlement, and the Minister's previous position in favour of the Band's request while he was the Minister of Aboriginal Relations "all militate strongly in favour of the honour of the Crown obliging the Minister himself to explain his one sentence denial to the Band." [at para. 118]

Implications

Blood Tribe is significant to administrative decision making involving First Nations' rights and entitlements. First, the Court highlighted the constitutional mandate on decision makers to consider the role of the decision in facilitating the ultimate reconciliation of prior Aboriginal occupation with de facto Crown sovereignty (the process of reconciliation). The Court emphasized that, while it may not change the outcome of the decision, the decision maker's failure to turn their mind to such a mandatory consideration may alone render their decisions unreasonable. It would be prudent for decision makers to include in their decision documents that they have considered this point.

Second, the Court held in obiter that the honour of the Crown extends to the nature and manner of communications with the Band. Communicating reasons to the Band is a sign of respect and the requisite comity and courtesy of the Crown as Sovereign toward a prior occupying nation. The Court also held that the honour of the Crown "prima facie" requires reasons in circumstances as those under consideration. Circumstances that trigger the honour of the Crown "prima facie" obligation to provide reasons by the decision maker include decisions of significance to the Band, historical claims followed by decades-long struggle for a remedy, claims with some evidence of legitimacy in the nature of settlement payments and agreements by the Crown. It would be prudent for decision makers to provide reasons for their decisions when these circumstances are present. We will continue to monitor developments on these issues.

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