COURT OF APPEAL FOR ONTARIO
CITATION: Restoule v. Canada (Attorney General), 2021 ONCA 779
DATE: 20211105
DOCKET: C66455 & C68595
Strathy C.J.O., Lauwers, Hourigan, Pardu and Brown JJ.A.
BETWEEN
Mike Restoule, Patsy Corbiere, Duke Peltier, Peter Recollet, Dean Sayers and Roger Daybutch, on their own behalf and on behalf of all members of the Ojibewa (Anishinaabe) Nation who are beneficiaries of the Robinson Huron Treaty of 1850
Plaintiffs
(Respondents)
and
The Attorney General of Canada, the Attorney General of Ontario and Her Majesty the Queen in Right of Ontario
Defendants
(Appellants/Respondent)
and
The Red Rock First Nation and the Whitesand First Nation
Third Parties
(Respondents)
AND BETWEEN:
The Chief and Council of Red Rock First Nation, on behalf of the Red Rock First Nation Band of Indians, the Chief and Council of the Whitesand First Nation on behalf of the Whitesand First Nation Band of Indians
Plaintiffs
(Respondents)
and
The Attorney General of Canada, and Her Majesty the Queen in Right of Ontario and the Attorney General of Ontario as representing Her Majesty the Queen in Right of Ontario
Defendants
(Appellants/Respondent)
Lisa La Horey, Christine Perruzza, Sarah Valair, Mark Crow, Insiyah Kanjee, Richard Ogden, Julia Mc Randall and Kevin Gray, for the appellants the Attorney General of Ontario, Her Majesty the Queen in Right of Ontario, and the Attorney General of Ontario as representing Her Majesty the Queen in Right of Ontario (C66455 & C68595)
Catherine Boies Parker, Q.C., David Nahwegahbow, Dianne G. Corbiere, Christopher E.J. Albinati, Daniel G. McCoy and Alexander Kirby, for the respondents Mike Restoule, Patsy Corbiere, Duke Peltier, Peter Recollet, Dean Sayers and Roger Daybutch on their own behalf and on behalf of all members of the Ojibewa (Anishinaabe) Nation who are beneficiaries of the Robinson Huron Treaty of 1850 (C66455 & C68595)
Harley I. Schachter and Kaitlyn E. Lewis, for the respondents the Red Rock First Nation, the Whitesand First Nation, the Chief and Council of Red Rock First Nation on behalf of the Red Rock First Nation Band of Indians, and the Chief and Council of the Whitesand First Nation on behalf of the Whitesand First Nation Band of Indians (C66455 & C68595)
Glynis Evans and Scott Warwick, for the respondent the Attorney General of Canada (C66455 & C68595)
Brian Gover and Spencer Bass, for the intervener the Biigtigong Nishnaabeg First Nation (C66455 & C68595)
Adam S.R. Williamson and Stuart Wuttke, for the intervener the Assembly of First Nations (C66455 & C68595)
Thomas Slade and Cory Giordano, for the intervener the Blood Tribe (C66455)
Scott Robertson, for the intervener the Indigenous Bar Association of Canada (C66455)
Halie Bruce, for the intervener the Union of British Columbia Indian Chiefs (C66455)
Heard: April 13, 20-23 and 26-28, 2021; June 1-3, 2021
On appeal from the judgments of Justice Patricia C. Hennessy of the Superior Court of Justice, dated June 17, 2019, with reasons reported at 2018 ONSC 7701, 431 D.L.R. (4th) 32, and 2018 ONSC 7712 (C66455).
On appeal from the judgments of Justice Patricia C. Hennessy of the Superior Court of Justice, dated June 26, 2020, with reasons reported at 2020 ONSC 3932, 452 D.L.R. (4th) 604 (C68595).
Paragraph
Reasons of the Court[1]
I. Joint Reasons of the Court[1]
Overview[1]
Facts[10]
Historical Context[10]
Pre-Treaty Events[32]
The Robinson Treaty Negotiations[43]
The Terms of the Robinson Treaties[60]
The Post-Treaty Payment of the Annuities[64]
The Trial Judge’s Reasons[69]
Trifurcation of the Case[69]
The Stage One Decision[70]
The Stage Two Decision[82]
Disposition of the Appeals[84]
II. Reasons of Lauwers and Pardu JJ.A.[98]
Introduction[98]
Issue One: Did the Trial Judge Err in Her Interpretation of the Augmentation Clause in the Treaties?[103]
The Treaty Text to Be Interpreted[104]
The Governing Principles of Treaty Interpretation[105]
The Trial Judge’s Interpretation of the Augmentation Clause[115]
The Governing Principles Applied[123]
Issue Two: Did the Trial Judge Err in Finding that the Doctrine of the Honour of the Crown Obliges the Crown to Increase the Annuities as Part of its Duty to Diligently Implement the Treaties?[231]
The Governing Principles Concerning the Honour of the Crown[232]
The Trial Judge’s Reasons[243]
The Position of Ontario on the Honour of the Crown[246]
The Position of Canada on the Honour of the Crown[248]
The Principles Concerning the Honour of the Crown Applied[249]
Issue Three: Did the Trial Judge Err in Finding There Was No Implied Term for the Indexation of the Annuities?[259]
The Trial Decision on Indexation[260]
Analysis[264]
Issue Four: Did the Trial Judge Err in Her Approach to Remedies?[271]
Ontario’s Arguments[277]
The Language of the Judgments[278]
The Definition of Net Crown Resource-Based Revenues[282]
The “Fair Share” Formulation[287]
Observations on Stage Three[326]
Issue Five: Did the Trial Judge Err in Her Costs Award for the Stage One Proceedings?[334]
The Trial Decision on Costs[339]
Analysis[342]
Disposition[360]
III. Reasons of Strathy C.J.O. and Brown J.A.[361]
Introduction[361]
The Trial Judge’s Interpretation of the Treaties[364]
Principles of Treaty Interpretation[388]
Standard of Review[389]
Position of the Parties[389]
Analysis[393]
Conclusion[411]
Analysis of the Trial Judge’s Interpretation of the Treaties[412]
First Error: Failing to Consider the Plain Meaning of the Treaties’ Text[419]
Second Error: Finding Ambiguity Where There Was None[436]
Third Error: Going Beyond What Was Possible on the Language of the Treaties[445]
Fourth Error: Failing to Consider the Only Interpretation that Reconciled Both Parties’ Intentions[451]
Reconciling the Parties’ Intentions in a Manner Consistent with the Historical Record[459]
Conclusion on Treaty Interpretation[488]
The Honour of the Crown[493]
The Principles of the Honour of the Crown[493]
The Crown’s Obligation to Honourably and Diligently Implement the Robinson Treaties[498]
Disposition[505]
IV. Reasons of Hourigan J.A.[508]
Introduction[508]
Analysis[521]
Standard of Review[521]
Fiduciary Duty[581]
Crown Immunity[629]
Limitations Defence[632]
Disposition[663]
APPENDIX “A”: Amended Stage One Judgments
A. Overview
1In 1850, the Anishinaabe on the northern shores of Lake Huron and Lake Superior entered into two Treaties with the Crown providing for the cession of a vast territory in northern Ontario. As part of the Treaties, the Crown agreed to pay a perpetual annuity to the Anishinaabe. This litigation centres on the nature of that obligation.
2The plaintiffs, who are beneficiaries of the Treaties, instituted two actions against Canada and Ontario seeking declaratory and compensatory relief related to the interpretation, implementation and alleged breach of the Treaties’ annuity provisions. The actions, which are being tried together, have been divided into three stages: Stage One involved the interpretation of the Treaties; Stage Two considered the Crown’s defences of Crown immunity and limitations; and Stage Three, which has yet to take place, will determine remaining issues, including damages and the allocation of liability between Canada and Ontario. The appeals before this court are from the partial judgments resulting from the Stage One and Stage Two decisions.
3In her decision on Stage One, the trial judge held that the Crown has a mandatory and reviewable obligation to increase the Treaties’ annuities when the economic circumstances warrant. To carry out that obligation, the trial judge found that the Crown must: (i) engage in a consultative process to determine the amount of net Crown resource-based revenues from the territories; and (ii) pay an increased annuity amount, reflecting a “fair share”, if there are sufficient Crown resource-based revenues to allow payment without incurring loss. The trial judge further determined that the principle of the honour of the Crown and the doctrine of fiduciary duty impose on the Crown the obligation to diligently implement the purpose of the Treaties’ promise.
4In her decision on Stage Two, the trial judge held that Crown immunity and provincial limitations legislation did not operate to bar the claims.
5Ontario appeals. Ontario argues that the trial judge erred in her interpretation of the Treaties and in rejecting its defences of Crown immunity and limitations.
6The appeals raise several issues. To address these issues, we are issuing both these joint reasons by the court (contained in section I of the reasons) and three sets of individual reasons by (i) Lauwers and Pardu JJ.A. (contained in section II), (ii) Strathy C.J.O. and Brown J.A. (contained in section III), and (iii) Hourigan J.A. (contained in section IV).
7The joint reasons provide the factual background to the case and summarize the court’s conclusions on the issues arising in the appeals. As we explain, we unanimously reject the majority of the arguments raised on appeal. We dismiss Ontario’s appeal from the Stage Two proceedings in its entirety and grant the appeal from the Stage One proceedings in part, though we part company on whether the trial judge erred in her interpretation of the Treaties and the appropriate remedy.
8The three sets of individual reasons address in greater detail the particular issues arising in the appeals and provide the rationale and analysis behind our disposition of the various issues.
9We begin first by reviewing the facts of this case and the trial judge’s reasons.
B. Facts
(1) Historical Context
(a) The Anishinaabe of the Upper Great Lakes
(i) Territory and Language
10The beneficiaries of the Robinson-Huron Treaty and Robinson-Superior Treaty (the “Robinson Treaties” or the “Treaties”) are known as the Anishinaabe of the upper Great Lakes. They are members of several First Nations who historically inhabited and continue to inhabit the north shores of Lake Huron and Lake Superior. Today, the beneficiaries of the Robinson Treaties live on and off reserve.
11At the time the Treaties were made in 1850, the Anishinaabe of the upper Great Lakes occupied and harvested a territory stretching eastward from the vicinity of present-day Thunder Bay, across the northern shores of Lake Superior and Lake Huron, to Lake Temiskaming, on the present-day border between Ontario and Quebec. The Robinson Treaties cover a territory that includes the current communities of Thunder Bay, Sault Ste. Marie, Sudbury, and North Bay, among others.
12Within this territory, the Anishinaabe were organized in Bands, occupying discrete territories. Bands considered their territories to be communal property. Band members spoke various dialects of Anishinaabemowin, the language of the Anishinaabe.
(ii) Governance
13The Anishinaabe have their own systems of governance. At trial, Elder Fred Kelly described two of the organizing principles of Anishinaabe law and governance: pimaatiziwin and gizhewaadiziwin. Pimaatiziwin is the principle that everything is alive and sacred. Gizhewaadiziwin, the way of the Creator, encompasses the seven sacred laws of creation. Anishinaabe governance also includes values of trust, responsibility, reciprocity, and renewal, and the understandings that the world is deeply interconnected, and that people must rely on one another to thrive.
14Ishkode, or fire, is also central to Anishinaabe governance and politics. In the Great Lakes region, ishkode could refer to the place where a family lived, to small or large gatherings, or even to an entire nation. “Council fire” could refer to the location where meetings were held and where decisions and agreements were made. The Anishinaabe had a complex network of council fires, which were hosted by an Ogimaa (a Chief or leader). Ogimaa were characterized by their prior accomplishments and were expected to be responsible for and generous to their people. Ogimaa were not rulers; the Anishinaabe decision-making process was deliberative and consensus based.
15The trial judge found that the Anishinaabe system of governance within the Treaty territories was continuous and longstanding.1
(b) The Relationship Between the Anishinaabe and Colonial Actors
(i) The Covenant Chain Alliance
16The relationship between the Anishinaabe and the Crown was informed by the Covenant Chain Alliance. While the Covenant Chain originally referred to the alliance between the Haudenosaunee Confederacy and the British in the early 17th century, the relationship later extended to Western Nations, including the Anishinaabe of the upper Great Lakes.
17The Covenant Chain Alliance was symbolized by a ship tied to a tree, connected with rope and iron, which later became silver. The rope represented an alliance of equals, iron represented strength, and silver represented durability and beauty. The metaphor suggested that if one party was in need, they only had to “tug on the rope” to give a signal that something was amiss and “all would be restored”.
18The westward extension of the Covenant Chain Alliance was a strategic military decision by the British, who sought to secure the neutrality of Western Nations, including the Anishinaabe, who had previously fought alongside the French during the Seven Years War.
19The British were not entirely successful in their efforts. In 1763, Odawa Chief Pontiac, joined by Anishinaabe warriors, led an uprising against the British. In response, the imperial government issued the Royal Proclamation of 1763 (the “Royal Proclamation”) to encourage peace, stability, and further settlement and development in the region.
20The trial judge found that the Covenant Chain Alliance was a notable example of the cross-cultural merging of diplomatic protocols and legal orders. These shared protocols continued in the decades leading up to the Robinson Treaties.2
(ii) The Royal Proclamation and the Council at Niagara
21The Royal Proclamation represented a unilateral declaration of Crown sovereignty over what is now Canada, while also affirming Aboriginal title and ownership of unpurchased lands. It represented, as the trial judge described it, a “foundational moment” in the history of Canada’s relationship with Indigenous peoples.3
22The Royal Proclamation created rules for the purchase and sale of “Indian lands” to prevent fraud and abuse. It prohibited private individuals from purchasing Indian lands and stipulated that Indian lands could only be surrendered to the Crown at a public meeting, in exchange for compensation. Ultimately, the trial judge found that the “motivation for and the fundamental concepts in the Robinson Treaties flow from the Royal Proclamation.”4
23After the Royal Proclamation was made, a Council was held at Niagara in 1764 between Crown representatives and over 1700 Indigenous people, including representatives of the Anishinaabe. At the Council, gifts and wampum belts, including the Great sCovenant Chain Wampum, were exchanged.
24The Royal Proclamation and the Council at Niagara communicated to the Anishinaabe of the upper Great Lakes and other First Nations that their autonomy and the title to their lands would be maintained and protected. The Royal Proclamation became a crucial part of the Covenant Chain relationship between the Anishinaabe and the British.
(iii) The War of 1812 (1812-1815)
25As members of the Covenant Chain relationship, Anishinaabe warriors fought alongside the British in the War of 1812. Some of those warriors played prominent roles in the negotiation of the Robinson Treaties. One such warrior was Chief Shingwaukonse, a key player in the events leading up to the Robinson Treaties and a participant in the Robinson Treaty Council.
26The Anishinaabe saw their military alliance with the Crown as an important part of the ongoing relationship.
(c) Civilization Policy and Annuities
(i) The Annuity Model
27Beginning in 1818, driven by increased immigration, the Crown changed the compensation model for land cession treaties. It moved from a one-time lump-sum payment or distribution to an annuity. The assumption was that land sales to settlers would generate sufficient funds to finance the annual payments in perpetuity and allow the Crown to control its cash flow.
28Annuity payments were structured on a population model. In 1818, the Crown set the annuity amount at two and a half pounds (the equivalent of $10) per person. This amount was used until 1850 in treaties negotiated in the southern portions of Upper Canada and, after 1841, in Canada West, irrespective of the size or value of the land ceded.
(ii) Civilization Policy
29As settlement and agricultural development in Upper Canada increased, and the need for military alliances with Indigenous communities decreased, the colonial government changed its Indigenous relations policy.
30Until 1820, the Indian Department was a military department, tasked with maintaining the Crown’s military alliance with Indigenous nations. When the Crown’s need for that alliance diminished, the department’s objectives changed from military to civil control. A “civilization” policy was implemented, seeking to “reclaim” Indigenous peoples from “barbarism” and assimilate them into a Christian, agrarian life.
31The civilization policy influenced the Crown’s approach to treaty-making, and, more specifically, annuity payments. One result of this policy was stronger controls and guidelines for annuity payments, intended to prevent the “misuse” of the funds. In 1830, the Colborne Policy mandated that annuities be paid through a requisition system, whereby Chiefs could request items that promoted a sedentary, agricultural, European way of life. The Colborne Policy was in place during the negotiation of the Robinson Treaties in 1850.
(2) Pre-Treaty Events
(a) Mining in the Upper Great Lakes Region
32During the 1840s, prospectors began exploring for valuable minerals on the south side of Lake Superior. “Copper fever” soon moved north. Despite the absence of a treaty with the Anishinaabe of the upper Great Lakes, in 1845 the Crown began to issue mining licences for the region.
33The issuance of mining licences and the encroachment of prospecting miners onto their lands prompted vigorous complaints from the Anishinaabe. Between 1846 and 1849, Anishinaabe Chiefs, including Chief Shingwaukonse, wrote petitions and memorials and met with government leaders to assert claims over their territory and to request compensation. The Anishinaabe Chiefs reminded the Crown of their long history of treaty-making, past promises made by the Crown to respect and protect their lands, and their military support of the Crown through alliances. The Chiefs requested compensation in various forms, including payment for resources already taken and those still to be taken, and a share of the benefits from mining.
34As the trial judge noted, the tension generated by Crown-sanctioned mining exploration was one of the triggers for the negotiation of the Robinson Treaties.5
(b) Vidal-Anderson Commission (1849)
35In 1849, the government appointed a commission to investigate the Anishinaabe grievances. Provincial land surveyor Alexander Vidal and Indian Superintendent Thomas G. Anderson were instructed to travel to the northern shores of Lake Huron and Lake Superior to investigate the Anishinaabe’s claims to the land, the size and dispersion of the Anishinaabe population, and their use of their territory. Vidal and Anderson were also asked to assess the Anishinaabe’s expectations for a potential treaty. During their travels, Vidal and Anderson met with 16 of the 22 Anishinaabe Chiefs.
36The Vidal-Anderson Commission reported on December 5, 1849. The report made several observations, conclusions, and recommendations, including:
the Anishinaabe’s land claim was legitimate;
the land was unlikely to be useful for agriculture;
although neither the Anishinaabe, nor the commissioners, knew the monetary value of the territory, its value was understood to stem from revenue from mining locations and surveyed lots at Sault Ste. Marie;
despite encountering treaty demands from the Chiefs that they considered unreasonable, Vidal and Anderson concluded that the Anishinaabe were willing to treat, provided that they could remain in their communities, that they could continue to hunt and fish, and that a perpetual annuity be provided as compensation;
Vidal and Anderson recommended that the Crown seek a surrender of the whole territory, rather than compensating the Anishinaabe only for the mining locations granted because:
o the land was comparatively valueless;
o some land had already been taken;
o going forward, this would allow the government to dispose of the land “without embarrassment” (meaning without encumbrance in modern terminology); and
o this would assist the Anishinaabe who were experiencing increasing scarcity of food and clothing;
- Vidal and Anderson recommended that a lower than usual annuity should be offered, given that:
o the land’s only value derived from the copper deposits along the lake shores;
o the Anishinaabe would retain their hunting and fishing rights, relinquishing nothing but land title; and
o the Anishinaabe would be no poorer once they ceded the land to settlers, because trade with the settlers would enable them to draw wealth from their territory;
Vidal and Anderson strongly recommended that, after the first payment, subsequent payments be made in clothing, provisions, goods, and implements, and should include an annual appropriation for establishing and maintaining schools; and
because little was known about the value of the territory, Vidal and Anderson recommended including a treaty provision that would, if necessary, promise an increase of payment upon further discovery or development of new sources of wealth.
37Vidal and Anderson proposed a compensation model that would take into account the discovery of new wealth in the territory. This was a new approach to treaty-making in Canada. While this idea had been suggested previously by Anishinaabe leaders, including Chief Shingwaukonse, the Vidal-Anderson Report is the first record of government officials engaging with it. The trial judge found that the Commissioners’ report prepared the Crown for treaty discussions “that would require an innovative solution to bridging the gap between the parties’ expectations”.6
(c) The Mica Bay Incident (1849)
38The Anishinaabe’s concerns about encroachments on their traditional lands were not assuaged by Vidal and Anderson’s visit. They were frustrated by government inaction after three years of discussions about a diplomatic settlement to their claims.
39While Vidal and Anderson travelled back to Toronto from the upper Great Lakes region, Chief Shingwaukonse and Chief Nebenaigoching led a party of 100 Anishinaabe to occupy a mining site at Mica Bay. Upon learning of the Anishinaabe’s march towards Mica Bay on November 19, 1849, Governor General Lord Elgin issued an Order in Council (“OIC”) authorizing the arrest of the participants. The Governor General also directed the provincial government to make a treaty with the Anishinaabe of the upper Great Lakes to finally resolve their outstanding claims.
40Chief Shingwaukonse and Chief Nebenaigoching, along with their lawyer, Allan Macdonell, were arrested and brought to a Toronto jail. While in Toronto, the Chiefs met with William B. Robinson.
41Robinson was a politician and a member of the Executive Council of government, and he had experience in the fur trade, the mining sector, and the treaty-making process. The trial judge noted that Robinson had “excellent relations” with the Anishinaabe and spoke some Anishinaabemowin.7
42Shortly after he met with Chief Shingwaukonse and Chief Nebenaigoching, Robinson offered his assistance to resolve the claims of the Anishinaabe of the upper Great Lakes. On January 11, 1850, the provincial government issued an OIC appointing Robinson as Treaty Commissioner for the negotiations.
(3) The Robinson Treaty Negotiations
(a) Instructions to Robinson
43Robinson’s mandate was set out in two OICs. The second, dated April 16, 1850, provided detailed instructions in response to Robinson’s request for guidance. Robinson was to endeavor to secure a treaty that covered all of the territory on the northern shores of Lake Huron and Lake Superior on the following terms:
the smallest possible initial payment (less than £5000);
a perpetual annuity no higher than what could be generated through interest on the notional capital sum of £25,000 less the initial payment; and
a provision for a deduction in the annuity if the population fell below 600.
44As a “bottom line” alternative, Robinson was to negotiate the surrender of the north eastern coast of Lake Huron and the Lake Superior Coast that included the mining operations at Mica Bay and Michipicoten.
45The trial judge identified two concerns likely to have influenced the limited financial authority given to Robinson.8 First, the Government was of the view that the Anishinaabe were not giving up much, given that the land was not suitable for agriculture and that they would continue to live, hunt, and fish on the territories after a treaty was signed. Second, the Province of Canada was in financial crisis. Robinson was aware, prior to the treaty negotiations, that the amounts available to him could not support the standard $10 per person annuity that had been provided in other treaties negotiated since 1818.
(b) The Treaty Council
46The treaty negotiations took place over three weeks in the late summer of 1850. As the trial judge noted, Robinson’s diary and his Official Report were the only documents identified at trial that provided details of the Treaty Council.9
47Robinson first met with the Superior and Huron delegations, separately, in Sault Ste. Marie (known to the Anishinaabe as Bawaating) and Garden River, respectively. Robinson met with the Superior delegation, led by Chief Peau de Chat, for significantly longer than he did with the Huron delegation, led by Chief Shingwaukonse. The two delegations then came together in Bawaating on September 5, 1850 for the substantive treaty discussions.
48The Treaty Council at Bawaating was conducted in Anishinaabemowin and English, and incorporated ceremonies and protocols characteristic of Great Lakes diplomacy. The trial judge noted that these ceremonies indicated that the Crown actors had developed a functional understanding of Anishinaabe law, diplomacy, and language.10
49Robinson’s initial proposal regarding reasonable reservations for the Anishinaabe and continued hunting rights throughout the ceded territory was accepted without further discussion. The provisions for reserves and the protection of harvesting rights were, according to the trial judge, more expansive than the Crown’s standard practice.11
50Robinson then discussed compensation. The Anishinaabe delegations preferred a perpetual annuity in exchange for the entire territory, rather than a lump-sum payment for only the existing mining locations. Given this preference, Robinson outlined the Crown’s proposal, offering the entirety of the cash he had in hand: £4,000 ($16,000) in cash, and a perpetual annuity of £1,000, both amounts to be divided between the Superior and Huron First Nations.
51Knowing that this proposal was lower than prior treaties, Robinson sought to justify it based on the unique nature of the land and other promises included in the Treaty. As the trial judge summarized, Robinson explained that:
the land was vast and “notoriously barren and sterile” when compared to the good quality lands in Upper Canada that were sold readily at prices which enabled the Government to be more liberal with compensation;
the settlers occupied the land covered by prior treaties in a way that precluded the possibility of Indian hunting or access to them, whereas the Anishinaabe would retain such rights over the lands ceded;
in all probability the lands in question would never be settled except in a few localities by mining companies; and
the occupation by settlers would be of great benefit to the Anishinaabe, who would gain a market for selling items and access to provisions at reasonable prices.12
52Chief Peau de Chat of the Superior delegation expressed his satisfaction with Robinson’s initial proposal and requested a day to reply to Robinson’s offer. Chief Shingwaukonse, from the Huron delegation, also asked for time to respond. The Chiefs both had to speak to their own Councils and determine their responses to Robinson’s offer, based on consensus.
53The next day, Chief Peau de Chat told Robinson that the Superior delegation was prepared to sign a treaty. Chief Shingwaukonse of the Huron delegation, on the other hand, was not. Chief Shingwaukonse made a counterproposal for an annuity of $10 per head. Robinson rejected this proposal, telling Chief Shingwaukonse that a majority of the Chiefs were in favour of the terms and that he was going to write up the Treaties on the basis approved by the Superior delegation.
54After scrutinizing the timing of Robinson’s initial offer and the Superior delegation’s response, the trial judge found that Robinson’s initial offer included the notion of an augmentation clause.13 She found that there was “no other reasonable conclusion”.14 The proposed augmentation clause stipulated that the annuity would increase if revenues received from the territory permitted the government to do so without incurring loss.
55On September 7, 1850, Robinson read the Robinson-Superior Treaty aloud to the Superior delegation. Translation services were provided. Chief Peau de Chat told Robinson he understood the Treaty and was ready to sign it.
56Robinson met with the Huron delegation later that day. Chief Shingwaukonse repeated his counterproposal. Robinson responded with an ultimatum: those who signed the Treaty would receive compensation for their people, and those who did not would receive no such compensation and would have no treaty.
57On September 9, 1850, Chief Shingwaukonse and Chief Nebenaigoching once again asked Robinson for a $10 per person annuity and raised the subject of land grants for the Métis. Robinson rejected their requests and had the Robinson-Huron Treaty read aloud to the delegation. When Chiefs Shingwaukonse and Nebenaigoching saw that other Chiefs in the Huron delegation were prepared to accept the proposed terms, they signed the Treaty.
58Ultimately, the Robinson-Huron Treaty was substantially the same as the Robinson-Superior Treaty, but because the Huron population was greater the initial annuity amount was set at £600, whereas the Robinson-Superior Treaty stipulated £500.
59Once the Treaties were signed, Robinson paid the Chiefs the initial sum. The Treaties were presented to Prime Minister Louis-Hippolyte LaFontaine on September 19, 1850. Robinson’s final report, dated September 24, 1850, was delivered to Indian Superintendent Colonel Robert Bruce. An OIC, dated November 29, 1850, declared that the Treaties were to be ratified and confirmed.
(4) The Terms of the Robinson Treaties
60The Robinson Treaties each have a surrender clause, a consideration clause, and an augmentation clause, among other terms. The trial judge set out transcriptions of both Treaties from an 1891 text.15
(a) The Robinson-Superior Treaty
61The trial judge reproduced the following excerpts of the Robinson-Superior Treaty:
The Surrender Clause
[The Anishinaabe of the Lake Superior territory] from Batchewanaung Bay to Pigeon River, at the western extremity of said lake, and inland throughout that extent to the height of the land which separates the territory covered by the charter of the Honorable the Hudson’s Bay Company from the said tract [and] also the islands in the said lake … freely, fully and voluntarily surrender, cede, grant and convey unto Her Majesty, Her heirs and successors forever, all their right, title and interest in the whole of the territory above described [except for certain reservations (three in all) set out in the annexed schedule]….16
The Consideration Clause
[F]or and in consideration of the sum of two thousand pounds of good and lawful money of Upper Canada to them in hand paid; and for the further perpetual annuity of five hundred pounds, the same to be paid and delivered to the said Chiefs and their Tribes at a convenient season of each summer, not later than the first day of August at the Honorable the Hudson’s Bay Company’s Posts of Michipicoton and Fort William....17
The Augmentation Clause
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; and provided, further, that the number of Indians entitled to the benefit of this Treaty shall amount to two-thirds of their present number (which is twelve hundred and forty), to entitle them to claim the full benefit thereof, and should their numbers at any future period amount to two-thirds of twelve hundred and forty, the annuity shall be diminished in proportion to their actual numbers.18
(b) The Robinson-Huron Treaty
62The trial judge reproduced the following excerpts of the Robinson-Huron Treaty:
The Surrender Clause
[The Anishinaabe i]nhabiting and claiming the eastern and northern shores of Lake Huron from Penetanguishene to Sault Ste. Marie, and thence to Batchewanaung Bay on the northern shore of Lake Superior, together with the islands in the said lakes opposite to the shore thereof, and inland to the height of land which separate the territory covered by the charter of the Honorable Hudson’s Bay Company from Canada, as well as all unconceded lands within the limits of Canada West to which they have any just claim … on behalf of their respective tribes or bands, do hereby fully, freely and voluntarily surrender, cede, grant, and convey unto Her Majesty, Her heirs and successors for ever, all their right, title and interest to and in the whole of the territory above described [except for certain reservations (15 in all) set forth in the annexed schedule]….19
The Consideration Clause
[F]or and in consideration of the sum of two thousand pounds of good and lawful money of Upper Canada to them in hand paid, and for the further perpetual annuity of six hundred pounds of like money, the same to be paid and delivered to the said Chiefs and their tribes at a convenient season of each year, of which due notice will be given, at such places as may be appointed for that purpose….20
63The augmentation clause in the Robinson-Huron Treaty is not materially different from the augmentation clause in the Robinson-Superior Treaty. It states:
The Augmentation Clause
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 should the territory hereby ceded by the parties of the second part at any future period produce such 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; and provided further that the number of Indians entitled to the benefit of this treaty shall amount to two-thirds of their present number, which is fourteen hundred and twenty-two, to entitle them to claim the full benefit thereof; and should they not at any future period amount to two-thirds of fourteen hundred and twenty-two, then the said annuity shall be diminished in proportion to their actual numbers.21
(5) The Post-Treaty Payment of the Annuities
64Based on the population of the Anishinaabe in 1850, the annuity (£600 for the Robinson-Huron Treaty and £500 for the Robinson-Superior Treaty) was approximately $1.70 and $1.60 per person, respectively. The method of distribution of the annuities was slightly different as between the Superior and Huron beneficiaries.
65Throughout the 1850s the Hudson’s Bay Company distributed the Robinson-Superior Treaty annuity payments in cash to the head of each family for nearly 25 years.
66Between 1851 and 1854, the Robinson-Huron Treaty annuities were paid in goods to each Band. No individual cash payments were made. Beginning in 1855, the Crown paid the annuity, in cash, to the Robinson-Huron Treaty beneficiaries.
67In 1875, the annuity was increased to $4 (£1) per person. This was the first and only time the annuity has been augmented; it has not changed since. In 1877, the Chiefs petitioned for arrears for the period of 1850-1874, arguing that the economic circumstances for an increase to $4 existed long before 1875. Payment of arrears eventually began in 1903.
68Part of the reason for the delay in the payment of arrears was a dispute about who was constitutionally required to pay them. In 1895, an arbitration panel determined that Ontario became responsible for paying augmented annuities after Confederation. Ontario appealed that decision to the Supreme Court, which granted the appeal.22 Canada’s further appeal to the Judicial Committee of the Privy Council was dismissed.23
C. The Trial Judge’s Reasons
(1) Trifurcation of the Case
69As noted above, the litigation surrounding the Robinson Treaties has been divided into three stages. Stage One proceeded by way of summary judgment motions and considered the interpretation of the Treaties. Stage Two, which also proceeded as summary judgment motions, considered Ontario’s defences of Crown immunity and limitations. Stage Three, which has yet to take place, will determine the remaining issues, including damages and the allocation of liability between Canada and Ontario.
(2) The Stage One Decision
(a) Overview of the Trial Judge’s Decision
70In her decision on Stage One, the trial judge held that the Crown has a mandatory and reviewable obligation to increase the Robinson Treaties’ annuities.24 She found that the Crown must engage in a consultative process with the Treaty beneficiaries and pay an increased annuity amount, reflecting a “fair share”, if there are sufficient Crown resource-based revenues to allow payment without incurring loss.25 The trial judge interpreted the £1 (or $4) limit in the Treaties’ augmentation clause to apply only to “distributive” payments to individuals, not as a limit or cap on the total collective annuity.26
71The trial judge also found that both the principle of the honour of the Crown and the doctrine of fiduciary duty impose on the Crown the obligation to diligently implement the purpose of the Treaties’ promise.27 Further, the trial judge provided guiding principles for what constitutes relevant Crown revenues and expenses.28 Finally, the trial judge rejected Ontario’s submission that an indexation term could be implied in the Treaties.29
(b) Treaty Interpretation
72The trial judge sought to engage in a purposive interpretation of the Treaties, to find the common intention of the parties, pursuant to the three steps set out in Marshall.30
73At step one, the trial judge found that the Treaties were ambiguous with respect to whether the annuity was a “collective” or an “individual” entitlement, and whether the parties intended to limit the collective annuity to £1 ($4) per person.31
74At step two, the trial judge considered the historical and cultural context leading up to the Treaties. She analyzed the perspective of the Anishinaabe and the Crown, as well as the post-Treaty evidence.32 She concluded that the Anishinaabe understood the Treaties as an agreement to live in harmony with settlers and to maintain a relationship in evolving circumstances.33 At the same time, the trial judge acknowledged that the Crown was in a dire financial situation but knew that it needed the consent of the Anishinaabe to fully access the wealth and benefits of the territory.34 The trial judge also concluded that the post-Treaty record was vague and inconsistent and was therefore of limited assistance to understanding the parties’ common intention.35
75At step three, the trial judge laid out three possible interpretations of the augmentation clause, based on her understanding of the positions of the parties in 1850:
the Crown’s promise was capped at $4 per person; once the annuity was increased to an amount equivalent to $4 per person, the Crown had no further liability; or
the Crown was obliged to make orders “as Her Majesty may be graciously pleased to order” for further payments above $4 per person when the economic circumstances permitted the Crown to do so without incurring loss; or
the Treaties were a collective promise to share the revenues from the territory with the collective; the Crown was obliged to increase the lump sum annuity so long as the economic condition was met; the reference to $4 in the augmentation clause was a limit only on the amount that may be distributed to individuals.36
76The trial judge concluded that the third interpretation best reflected the common intention of the parties in 1850.37 She noted that an augmentation clause linked to revenues was an innovative solution that reconciled the diverging expectations of the Anishinaabe and the Crown.38 Ultimately, the Treaties were intended to renew and reinforce an ongoing relationship.
(c) Crown Obligations and Discretion
77The trial judge concluded that the principle of the honour of the Crown and the doctrine of fiduciary duty impose an obligation to diligently implement the Treaties’ promise to achieve their purpose.39 Specifically, the trial judge held that the Crown has a duty to engage in a process to determine whether the annuities can be increased without incurring loss.40 Further, the Crown does not have unfettered discretion on whether or how to make increases to the annuities but does maintain significant discretion in implementing the Treaties.41
78The trial judge found that a sui generis fiduciary duty did not arise from the Treaties’ promise.42 However, she held that the Crown has an ad hoc fiduciary duty because: (i) the Crown undertook to act in the best interests of the Anishinaabe and had no other conflicting demands when engaging in a process to implement the augmentation clause; (ii) the beneficiaries constitute a defined class of persons vulnerable to the Crown’s control; and (iii) the beneficiaries stood to be adversely affected because of the discretionary control of the Crown over the annuity increase.43 The purpose of this duty is to “facilitate supervision of the high degree of discretionary control assumed by the Crown over the lives of Indigenous peoples”.44
(d) Implementation of the Treaty Promise
79The trial judge largely left the practical aspects of implementation to Stage Three of the litigation. However, she provided some general principles as a “starting point”, subject to further clarification and direction from the court.45 She outlined the following guiding principles to aid the parties in determining what constitutes relevant Crown revenues and expenses, what constitutes a fair share of net Crown revenues, and the Crown’s duties of disclosure and consultation:
Crown resource-based revenues are those that arise directly or in a closely related way to the use, sale or licensing of land (including water) in the Treaty territory, including mineral and lumber revenues and other analogous revenues. Personal, corporate, and property tax revenues are not included;
Crown expenses are expenses related to collecting, regulating and supporting relevant revenues, but do not include the costs of infrastructure and institutions built with tax revenues;
it is impossible to gauge what a “fair share” of new Crown revenues is, but a fair share does not include the Treaty beneficiaries taking 100 percent of the net benefits from the Crown;
the Crown has a duty to disclose sufficient information for the purpose of determining net Crown resource-based revenues; and
the Crown may have a duty to consult when implementing the Treaty promise, given that its conduct may have an adverse impact on a Treaty right.46
(e) Implied Indexation Term
80The trial judge rejected Ontario’s claim (and the Huron and Superior Plaintiffs’ alternative claim) that a term should be implied that the Treaty annuities would be indexed for inflation. The Huron and Superior Plaintiffs and Ontario accepted that the phenomenon of persistent inflation was not within the contemplation of the parties at the time the Treaties were signed, but argued that the parties would have included such a term had they known that the purchasing power of the annuities would be eroded over time. The trial judge found that this would effectively be “imputing knowledge of one historical fact in the absence of the constellation of other historical facts”.47 Moreover, the effects of inflation could be addressed adequately through the augmentation of the annuity.48 The trial judge acknowledged, however, that if an appellate court were to find that the augmentation clause does not operate as she found, a second look at the indexing claim would be necessary.49
(f) Costs
81The trial judge awarded costs to the Huron Plaintiffs and the Superior Plaintiffs on a partial indemnity basis, fixed at 85 percent of their fees and 100 percent of disbursements.50 The Huron Plaintiffs were ultimately awarded a total of $9,412,447.50 and the Superior Plaintiffs were awarded $5,148,894.45.
(3) The Stage Two Decision
82In her decision on Stage Two, the trial judge held that Crown immunity and provincial limitations legislation did not operate to bar the Huron Plaintiffs’ and Superior Plaintiffs’ claims. First, she rejected Ontario’s argument that Crown immunity shielded the Crown from claims for breach of fiduciary duty arising prior to September 1, 1963, being the date of the coming into force of the Proceedings Against the Crown Act (“PACA”).51 Second, she dismissed Ontario’s argument that claims for treaty breaches are properly characterized as claims on a “simple contract” or a “speciality”, or as an “action of account”, and therefore statute barred by the former Limitations Act (the “1990 Limitations Act”).52 Third, the trial judge discussed in obiter that, had it been necessary to do so, she would have held that the Nowegijick principles and the principle of the honour of the Crown applied when interpreting the Crown’s statutory defences.53
83The trial judge accordingly granted partial summary judgment for the Huron and Superior Plaintiffs on the questions of limitations and Crown immunity. She deferred until Stage Three the issue of whether Ontario and Canada are jointly and severally liable or in the alternative whether Canada is the paymaster.
D. Disposition of the Appeals
84As noted at the outset, we have written these joint reasons to summarize the background to this case and our disposition of the appeals. Our individual reasons further explain the basis of our disposition of the various issues raised. These issues are the following:
What is the standard of review for treaty interpretation?
Did the trial judge err in her interpretation of the augmentation clause in the Treaties?
Did the trial judge err in finding that the honour of the Crown requires the Crown to act honourably in fulfilling the Treaties’ promise?
Did the trial judge err in finding that the Crown’s discretion to augment the annuities is justiciable and not unfettered?
Did the trial judge err in finding that the Crown is under a fiduciary duty regarding the augmentation clause in the Treaties?
Did the trial judge err in finding that the Crown is not immune from breaches of fiduciary duty prior to 1963?
Did the trial judge err in finding that provincial limitations legislation does not bar the claims for breach of the Treaties?
Did the trial judge err in finding that there was no implied term for the indexation of the annuities?
Did the trial judge err in her costs award for the Stage One proceedings?
Did the trial judge err in her approach to remedies in the Stage One proceedings?
85First, on the issue of the standard of review for treaty interpretation, Strathy C.J.O. and Brown J.A. conclude that the trial judge’s interpretation of the Treaties is reviewable on a correctness standard. Lauwers J.A. concurs. Hourigan J.A., in contrast, concludes that treaty interpretation is reviewable on a standard of palpable and overriding error, absent extricable errors of law, which are reviewed on a correctness standard. Pardu J.A. concurs with Hourigan J.A.
86Second, on the issue of the trial judge’s interpretation of the Treaties, Lauwers and Pardu JJ.A. hold that the trial judge did not err in her interpretation of the Treaties’ augmentation clause. Hourigan J.A. concurs. Conversely, Strathy C.J.O. and Brown J.A. hold that the trial judge committed errors of law in her interpretation of the Treaties, leading to an unreasonable interpretation.
87Third, on the issue of the honour of the Crown, we unanimously agree that the doctrine is engaged in this case. Lauwers and Pardu JJ.A., with whom Hourigan J.A. concurs, conclude that the honour of the Crown obliges the Crown to increase the annuities as part of its duty to diligently implement the Treaties. Strathy C.J.O. and Brown J.A. conclude that the honour of the Crown requires, at a minimum, that the Crown turn its mind from time to time to consider increasing the amount of the annuities.
88Fourth, on the issue of the Crown’s discretion to augment the annuities, Lauwers and Pardu JJ.A., with whom Hourigan J.A. concurs, conclude that the Crown’s discretion to augment the annuities is justiciable and not unfettered. Strathy C.J.O. and Brown J.A. agree that the Crown’s discretion is justiciable and not unfettered.
89Fifth, on the issue of fiduciary duties, Hourigan J.A., writing for a unanimous court, holds that the trial judge erred in finding that the Crown is under a fiduciary duty regarding the implementation of the augmentation clause in the Robinson Treaties. We therefore agree that this finding should be set aside.
90Sixth, on the issue of Crown immunity, Hourigan J.A., writing for a unanimous court, concludes that it is not necessary to consider whether the Crown is immune from breaches of fiduciary duty prior to 1963 given the court’s conclusion that the Crown does not owe a fiduciary duty regarding the implementation of the augmentation clause.
91Seventh, on the issue of limitations, Hourigan J.A., writing for a unanimous court, holds that provincial limitations legislation does not preclude the breach of Treaty claims.
92Eighth, on the issue of indexation, Lauwers and Pardu JJ.A., writing for a unanimous court, conclude that the trial judge did not err in rejecting the argument that the annuities paid pursuant to the Robinson Treaties should be indexed to mitigate the impact of inflation.
93Ninth, on the issue of costs, Lauwers and Pardu JJ.A., writing for a unanimous court, conclude that Ontario’s costs appeal from the Stage One proceedings should be allowed in part. We grant leave to appeal from the award of $9,412,447.50 in favour of the Huron Plaintiffs; we uphold the disbursements allowed by the trial judge, but set aside the fees allowed and remit the matter of the Huron Plaintiffs’ costs to the trial judge for reconsideration in accordance with the reasons of Lauwers and Pardu JJ.A. We deny leave to appeal from the costs award in favour of the Superior Plaintiffs in the sum of $5,148,894.45.
94Finally, on the issue of remedies in the Stage One proceedings, Lauwers and Pardu JJ.A., with whom Hourigan J.A. concurs, conclude that the trial judge erred in directing, as part of the judgments for the Stage One proceedings, the payment of annuities corresponding to a “fair share” of the value of the resources in the territory. Further, the trial judge also erred in directing in the judgments that tax revenues and the costs of infrastructure and institutions should be excluded from the calculation of net Crown resource-based revenue. Lauwers, Hourigan and Pardu JJ.A. therefore direct that the Stage One judgments should be amended as set out in Appendix “A” to these reasons by:
deleting “with the amount of annuity payable in any period to correspond to a fair share of such net revenues for that period” in para. 1(a);
deleting “and the fiduciary duty which the Crown owes to the First Nation Treaty parties” in para. 1(c);
deleting “so as to achieve the Treaty purpose of reflecting in the annuities a fair share of the value of the resources, including the land and water in the territory” in para. 1(d);
deleting “but not including personal, corporate or property tax revenues” in para. 3(b)(i);
deleting “but do not include the costs of infrastructure and institutions that are built with Crown tax revenues” in para. 3(b)(ii);
substituting “that are fairly and reasonably equal to a fair share of” with “to be disbursed pursuant to the augmentation promise from” in para. 3(c); and
with respect to the Huron Plaintiffs only, setting aside para. 5 of the partial judgment in the Huron action and remitting the matter of costs to the trial judge for determination in accordance with these reasons.
95Strathy C.J.O. and Brown J.A. would vary the judgments on different terms, as set out in their reasons.
96The Stage One appeal is therefore granted in part. The Stage One judgments are amended as set out in Appendix A; leave to appeal the costs award in favour of the Superior Plaintiffs is denied; and leave to appeal the costs award in favour of the Huron Plaintiffs is granted, the disbursements allowed by the trial judge are upheld, and the fees allowed are set aside and remitted to the trial judge for reconsideration. The Stage Two appeal is dismissed in its entirety.
97If the parties cannot agree on costs for the appeals, they may provide the court with written submissions no more than 10 pages in length, along with their bills of costs. The Huron Plaintiffs, the Superior Plaintiffs and Canada are to provide their submissions within 15 days of the release of these reasons. Ontario is to provide its submissions within 30 days of the release of the reasons.
A. Introduction
98The primary issue raised in Ontario’s appeal from the Stage One judgments turns on the interpretation of a provision in the Robinson Treaties known as the augmentation clause. Briefly stated, the trial judge found that the augmentation clause obliges “the Government of this Province” to “increase the annuity” to the First Nations “from time to time” when it can do so “without incurring loss”.
99Ontario asserts that the trial judge made errors in the interpretation of the Treaties that we would group into four issues:
the interpretation of the augmentation clause;
the finding that the doctrine of the honour of the Crown obliges the Crown to increase the annuities as part of its duty to diligently implement the Treaties;
the finding that the Treaties do not contain an implied term to index the annuities; and
the approach to remedies.
100We would largely reject Ontario’s submissions for reasons that can be summarized in seven statements:
the trial judge correctly instructed herself on the governing principles of treaty interpretation set out in Marshall and other cases;54
the trial judge’s interpretation of the augmentation clause is grammatically and contextually correct;
the trial judge did not make any palpable and overriding errors of fact, errors in principle, or extricable errors of law in her consideration of the evidence, contrary to Ontario’s argument;
the trial judge did not err in her analysis of the form and content of the Crown’s discretion, or the First Nations’ understanding of the scope of that discretion, contrary to Ontario’s argument;
the trial judge correctly found that the honour of the Crown obliged the Crown to increase the annuities as part of its duty to diligently implement the Treaties;
the trial judge correctly rejected Ontario’s proposal to supplant the augmentation clause by implying a judicially created indexing term into the Treaties; and
despite our agreement with the trial judge thus far, her interpretation of the Treaties fell short on the “fair share” issue.
101Before turning to our analysis, we note that these appeals raise a number of other issues that are addressed in the reasons of our colleagues. We concur with the reasons of Hourigan J.A. on the issues of fiduciary duty, Crown immunity and limitation defences. On the issue of the standard of review for treaty interpretation, Lauwers J.A. concurs with Strathy C.J.O. and Brown J.A., and Pardu J.A. concurs with Hourigan J.A.
102We now turn to the four interpretation issues and also address the issue of costs, then conclude with our disposition.
B. Issue One: Did the Trial Judge Err in Her Interpretation of the Augmentation Clause in the Treaties?
103We begin by setting out the Treaty text. We next address the governing principles and the trial judge’s interpretation of the text, and then apply the governing principles to Ontario’s arguments.
(1) The Treaty Text to Be Interpreted
104For convenience, we will use the text of the Robinson-Huron Treaty, which is almost identical to the text in the Robinson-Superior Treaty. The analysis applies equally. Particularly pertinent text is underlined and we have inserted several guideposts. The other text provides context. The Robinson-Huron Treaty provides:
[F]or, and in consideration of the sum of two thousand pounds of good and lawful money of Upper Canada, to them in hand paid, and [the collective annuity] for the further perpetual annuity of six hundred pounds of like money, the same to be paid and delivered to the said Chiefs and their tribes at a convenient season of each year, of which due notice will be given, at such places as may be appointed for that purpose, they the said Chiefs and Principal men, on behalf of their respective Tribes or Bands, do hereby fully, freely, and voluntarily surrender, cede, grant, and convey unto Her Majesty….
And the said William Benjamin Robinson of the first part, on behalf of Her Majesty and the Government of this Province, hereby promises and agrees to make, or cause to be made, the payments as before mentioned; and further to allow the said Chiefs and their Tribes the full and free privilege to hunt over the Territory now ceded by them, and to fish in the waters thereof, as they have heretofore been in the habit of doing; saving and excepting such portions of the said Territory as may from time to time be sold or leased to individuals or companies of individuals, and occupied by them with the consent of the Provincial Government.
[the augmentation clause] 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 should the territory hereby ceded by the parties of the second part at any future period produce such 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, [the first proviso] provided that the amount paid to each individual shall not exceed the sum of one pound Provincial currency in any one year, [the graciousness clause] or such further sum as Her Majesty may be graciously pleased to order; and [the second proviso] provided further that the number of Indians entitled to the benefit of this treaty shall amount to two-thirds of their present number, which is fourteen hundred and twenty-two, to entitle them to claim the full benefit thereof; [the diminution clause] and should they not at any future period amount to two-thirds of fourteen hundred and twenty-two, then the said annuity shall be diminished in proportion to their actual numbers.
Within the first proviso to the augmentation clause is the clause, “or such further sum as Her Majesty may be graciously pleased to order”. The parties called this the “ex gratia clause” or the “graciousness clause”.55 We will use the latter term.
(2) The Governing Principles of Treaty Interpretation
105The trial judge correctly instructed herself on the principles governing the interpretation of historical treaties.56 No one argues to the contrary.
106Principles related to common intention, text, context and purpose inform the interpretation of historical treaties. These principles are well settled, although the facts of any particular case will make some more salient than others.57 The principles work to instantiate the constitutional principle of the honour of the Crown in the service of the reconciliation of Aboriginal and non-Aboriginal Canadians.
(a) Common Intention
107In interpreting a treaty, the court must “choose from among the various possible interpretations of the common intention [at the time the treaty was made] the one that best reconciles” the interests of the First Nations and the Crown.58 The common intention is that of both treaty partners, not one alone.59
(b) Text, Context and Purpose
108A court must attend to both the written text of a treaty and the evidence about the context in which it was negotiated, consistent with the principle that extrinsic evidence is always available to interpret historical treaties. Mackinnon A.C.J.O. stated in Taylor and Williams, “if there is evidence by conduct or otherwise as to how the parties understood the terms of the treaty, then such understanding and practice is of assistance in giving content to the term or terms.”60 He accepted the common submission of counsel before him that “recourse could be had to the surrounding circumstances and judicial notice could be taken of the facts of history.”61 He added: “In my opinion, that notice extends to how, historically, the parties acted under the treaty after its execution.”62 The court need not find an ambiguity in a treaty before admitting extrinsic evidence.63
109Binnie J. explained in Marshall:
The special rules are dictated by the special difficulties of ascertaining what in fact was agreed to [in historical treaties]. The Indian parties did not, for all practical purposes, have the opportunity to create their own written record of the negotiations. Certain assumptions are therefore made about the Crown’s approach to treaty making (honourable) which the Court acts upon in its approach to treaty interpretation (flexible) as to the existence of a treaty, the completeness of any written record (the use, e.g., of context and implied terms to make honourable sense of the treaty arrangement, and the interpretation of treaty terms once found to exist.64
McLachlin J. added cultural and linguistic differences to this non-exhaustive list of contextual considerations.65
110Unlike modern treaties, historical treaties are not a “product of lengthy negotiations between well-resourced and sophisticated parties.”66 The historical record of the negotiations shows how quickly the Treaties at issue in these appeals were negotiated and how much they left undefined. The trial judge rightly characterized the Treaties as “lean on details”, particularly respecting the future operation of the augmentation clause.67
111The court must take a purposive approach to the interpretation of a treaty obligation, informed by the honour of the Crown,68 recognizing that treaty promises are “solemn promises” and that treaties are “sacred”.69
(c) Reconciliation and the Honour of the Crown
112The reconciliation of Aboriginal and non-Aboriginal Canadians is the “grand purpose” of s. 35 of the Constitution Act, 1982,70 and the “first principle” of Aboriginal law.71 This “fundamental objective”72 flows from “the tension between the Crown’s assertion of sovereignty and the pre-existing sovereignty, rights and occupation of Aboriginal peoples”73 and the need to reconcile “respective claims, interests and ambitions.”74
113Reconciliation is also the objective of the legal approach to treaty rights and the “overarching purpose” of treaty making and, perforce, treaty promises.75 Reconciliation underpins the doctrine of the honour of the Crown,76 which operates as a “constitutional principle.”77 Hence: “The controlling question in all situations is what is required to maintain the honour of the Crown and to effect reconciliation between the Crown and the Aboriginal peoples with respect to the interests at stake.”78
114We will consider the honour of the Crown more closely in addressing the second issue.
(3) The Trial Judge’s Interpretation of the Augmentation Clause
115As noted, in the task of treaty interpretation, in addition to the treaty text, the court must advert to the larger context in which the treaty was negotiated. The Indigenous perspective is to be considered and given due weight.79 That perspective was fairly established on evidence that Ontario does not dispute. The trial judge stated:
From the Anishinaabe perspective, the central goal of the treaty was to renew their relationship with the Crown, which was grounded in the Covenant Chain alliance and visually represented on wampum belts with images of two figures holding hands as part of two links in a chain.80
116She added:
These principles of respect, responsibility, reciprocity, and renewal were fundamental to the Anishinaabe’s understanding of relationships. For the Anishinaabe, the Treaties were not a contract and were not transactional; they were the means by which the Anishinaabe would continue to live in harmony with the newcomers and maintain relationships in unforeseeable and evolving circumstances.81
117The trial judge considered whether the augmentation clause distinguishes between a collective annuity payable to each First Nation as a whole, on the one hand, and the annuity paid to individual band members, on the other hand. She found that the augmentation clause does make a distinction between “the collective annuity (either £500 or £600) paid to the Chiefs and their Tribes and a distributive amount that is paid to individuals from the collective amount and is limited to £1 (equivalent to $4) or such further sum as Her Majesty may be graciously pleased to order”.82
118The trial judge set out her conclusion at the beginning of her reasons:
I find that the Crown has a mandatory and reviewable obligation to increase the Treaties’ annuities when the economic circumstances warrant. The economic circumstances will trigger an increase to the annuities if the net Crown resource-based revenues permit the Crown to increase the annuities without incurring a loss.83
119In working her way to that conclusion, the trial judge posited three possible interpretations of the augmentation clause. The first, which Ontario still advances, is that: “the Crown’s promise was capped at $4 per person; in other words, once the annuity was increased to an amount equivalent to $4 per person, the Crown had no further liability.”84 The trial judge rejected this interpretation.85
120The second interpretation was that “the Crown was obliged to make orders (“as Her Majesty may be graciously pleased to order”) for further payments above $4 per person when the economic circumstances permitted the Crown to do so withoutincurring loss.”86 The trial judge noted that this interpretation had a “certain logic”, although she rejected it.87
121Instead, the trial judge accepted the third interpretation: “that the Treaties were a collective promise to share the revenues from the territory with the collective; in other words, to increase the lump sum annuity so long as the economic condition was met.”88 In her view, the third interpretation “includes the second interpretation”.89 She added: “The reference to £1 (equivalent of $4) in the augmentation clause is a limit only on the amount that may be distributed to individuals.”90
122The trial judge held: “Applying the approved treaty interpretation principles, including the honour of the Crown, and examining the full context in which the Treaties were made, only the third interpretation comes close to reflecting the parties’ common intention.”91 She added:
This interpretation holds the parties in a relationship, looking toward the future together. I find that the interpretation that imposes a $4 per person cap on the annuities does not reflect either the common intention nor reconcile the parties’ interests; it suggests that the Treaties were a one-time transaction. As the historical and cultural context demonstrates, this was not the case; the parties were and continue to be in an ongoing relationship.92
(4) The Governing Principles Applied
123We stated at the outset that, in our view, having properly instructed herself on the principles, the trial judge’s interpretation of the augmentation clause is grammatically and contextually correct. In this section, we address and reject two of Ontario’s arguments. We address Ontario’s textual argument in the section of these reasons on Crown discretion.93
124Ontario takes the position that the $4 per person amount specified in the Treaties fixes the total amount of the annuity payable by the Crown, which is calculated by multiplying the number of eligible individual recipients by $4. While the Crown is obligated to pay that amount, it has “unfettered discretion” as to when and whether to increase the per person annuity beyond this hard cap and therefore to increase the total annuity paid. The Crown has not done so since 1875.
125Ontario makes two basic arguments. First, the trial judge erred in her findings on the common intentions of the Treaty parties because she failed to take into account certain evidence of Crown intention. Second, she erred in finding that the Crown discretion in the augmentation clause to increase the annuity was not unfettered. These arguments are linked because Ontario asserts that the Crown would never have agreed to fetter its discretion. The idea was unthinkable.
(a) The Trial Judge Did Not Err in Her Findings on the Common Intentions of the Treaty Parties
126Ontario stated in its factum:
There were few disputes at trial regarding primary facts disclosed by the historical record: what was done, said and written, and who was involved in events. Ontario does not challenge the facts set out by the trial judge in the Reasons, although the judge’s summary of the facts is materially incomplete; important evidence indicating how the Treaty parties actually understood the annuity promise was ignored. Partly on that basis Ontario challenges certain key inferences drawn by the trial judge.
However, it became clear in oral argument that Ontario does challenge the trial judge’s material findings root and branch.
127Ontario argues that the trial judge failed to take certain crucial evidence into account. The trial judge acknowledged that her task was to discern the parties’ common intention, but Ontario asserts that she failed to accord due weight to the evidence of Crown intention before the Treaty negotiations, during the negotiations, in their immediate aftermath, and later in the post-Treaty period. The trial judge also unreasonably discounted evidence of Anishinaabe intention that was contrary to her interpretation of the Treaties. Ontario labels these as errors in law or palpable and overriding errors of fact that oblige this court to set aside the judgment and either render judgment in the terms that Ontario seeks or order a new Stage One trial.
128The standard of appellate review related to a palpable and overriding error is very deferential:
“Palpable” means an error that is obvious. “Overriding” means an error that goes to the very core of the outcome of the case. When arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall.94
129Ontario argues that Crown actors and other non-Indigenous individuals understood the Crown’s obligation to augment the Treaties to be limited to or capped at a maximum of $4 per person, the amount Ontario has been paying since 1875. The trial judge misapprehended the common intentions of the Treaty parties by unreasonably discounting or ignoring certain historical evidence.
130Ontario identifies evidence that contradicts the trial judge’s interpretation. In analyzing this evidence, we are mindful of the surfeit of evidence reviewed by the trial judge. To achieve the result Ontario seeks, the countervailing evidence must go to the very core of the trial judge’s reasoning and reveal it to be mistaken. With respect, the countervailing evidence falls far short of demonstrating a palpable and overriding error of fact, an error in principle, or an error of law.
131Several of the documents that Ontario relies upon were created close to the time of Treaty formation, some by individuals that were present – or nearby – when the Treaties were negotiated. The rest of the documents, some of which were not expressly addressed by the trial judge, were penned years, even decades, after the Treaties were signed. They are of limited value in discerning the Crown’s intentions when the Treaties were signed. The trial judge did not err in her treatment of this evidence.
(i) The Proximate Evidence
132Each document in the proximate evidence requires careful evaluation to discern what it reveals about Crown intention when the Treaties were signed. Ontario refers to the Orders in Council (“OICs”) instructing Robinson, his Treaty Report, a letter from a Hudson Bay Company factor, correspondence between Robinson and Colonel Robert Bruce, and a newspaper article.
(i) The Orders-in-Council Instructing Robinson
133Robinson received instructions in two OICs. The first, dated January 11, 1850, appointed him as Treaty Commissioner and authorized him to negotiate treaties with the Anishinaabe of Lake Superior and Lake Huron. The second, dated April 16, 1850, described Robinson’s mandate in more detail. Ontario argues that the trial judge failed to advert to the implications of the second OIC in determining Crown intention.
134In describing the instructions to Robinson in the second OIC, the trial judge noted that “the Executive Council intentionally sent Robinson to the Treaty Council without the financial authority to offer to match annuity provisions from previous treaties.”95 She observed that this might well have reflected the financial crisis then facing the Province of Canada.96
135The trial judge did not mention the second OIC explicitly when she discussed Crown intention, but she implicitly referred to it in her comment that “Robinson’s instructions were flexible enough that his augmentation clause proposal could fit within their scope.”97 She added that, in her view, the augmentation clause’s “novelty would have compelled him to discuss the idea and seek approval before making it an official offer.” On this basis, the trial judge found it reasonable to conclude that when Robinson met Governor General Lord Elgin in Sault Ste. Marie on August 30 and August 31, 1850, he received approval to propose the augmentation clause.98
136Ontario argues that under any interpretation, the augmentation clause went beyond the instructions in the second OIC. In the context of those instructions, Robinson was unlikely to have been seeking authorization to promise uncapped annuities, or annuities that could ever rise above $10 per person, as provided in earlier treaties.
137The augmentation clause did depart from Robinson’s instructions in the second OIC. But the historical circumstances when the Treaties were signed – including the Crown’s financial situation and the low expectations for the future productivity of the Treaty territories – do not make Ontario’s interpretation of a very low cap, from the First Nations perspective, more likely to have found Lord Elgin’s approval. Moreover, the augmentation clause took the approach recommended in the report of the Vidal-Anderson Commission by including a provision “for an increase of payment upon further discovery and development of any new sources of wealth.”99 The augmentation clause would not have been a bolt out of the blue. The trial judge did not err in her consideration of the second OIC.
(ii) Robinson’s Treaty Report
138Ontario argues that the trial judge failed to give any weight to Robinson’s Treaty Report, dated September 24, 1850. To the contrary, it is clear that the trial judge took the Treaty Report into account. She quoted from the following section:
I trust his Excellency will approve of my having concluded the treaty on the basis of a small annuity and the immediate and final settlement of the matter, rather than paying the Indians the full amount of all moneys on hand, and a promise of accounting to them for future sales. The latter course would have entailed much trouble on the Government, besides giving an opportunity to evil disposed persons to make the Indians suspicious of any accounts that might be furnished.
Believing that His Excellency and the Government were desirous of leaving the Indians no just cause of complaint on their surrendering the extensive territory embraced in the treaty; and knowing there were individuals who most assiduously endeavored to create dissatisfaction among them, I inserted a clause securing to them certain prospective advantages should the lands in question prove sufficiently productive at any future period to enable the Government without loss to increase the annuity. This was so reasonable and just that I had no difficulty in making them comprehend it, and it in a great measure silenced the clamor raised by their evil advisers.100
139Robinson did not refer to a $4 cap. His silence cannot be taken to mean, as Ontario argues, that the operation of such a cap is obvious. Focussing on the second section of the text set out above, the trial judge found that augmentation capped at $4 could not have achieved Robinson’s purpose in securing the Treaties:
When Robinson reported that the augmentation clause was so “reasonable and just”, it is my view that he could not have been referring to an annuity capped at $4. Chief Shingwaukonse and the other Anishinaabe Chiefs would not have found a $4 cap to their annuities either reasonable or just; it was far less than half of what other bands received as fixed sum annuities and, additionally, it did not respond to their demand for a share of the future wealth of the territory.101
As noted earlier, this approach was consistent with the recommendations of the Vidal-Anderson Commission. This factual finding was open to the trial judge.
140Ontario argues that this part of Robinson’s Treaty Report suggests that he could not have intended an uncapped annuity because the trial judge’s interpretation requires “precisely the endless accounting and ‘trouble’ that Robinson reports he avoided.”
141We would not give effect to this argument for three reasons. First, some rough form of accounting was required in order to determine whether the augmentation clause was triggered, under any interpretation. This is undeniable.
142Second, the historical context tells a more nuanced tale. The augmentation clause is not “a promise of accounting … for future sales.” Robinson’s “trouble” was likely related to the onerous task of tracking each sale of land on the territory and the interest gained on the proceeds of those sales, as the practice had been in other areas of the Province.102 By contrast, monitoring the overall revenue and expenses linked to the territory would then have been a relatively simple task, whether or not the annuity was capped at $4 per person.
143Third, Robinson does not appear to have expected that significant revenues would be generated from the territory. He stated, “these lands now ceded are notoriously barren and sterile, and will in all probability never be settled except in a few localities by mining companies.” Given this, it is unlikely that he would have viewed the ongoing monitoring of total revenues and expenses from the Treaty territories as a particularly complex or troublesome task. The reference to “trouble” is not, therefore, inconsistent with the trial judge’s interpretation.
(iii) Buchanan’s Letter to Simpson
144Ontario points to two accounts from individuals who were in the vicinity when the Treaties were signed, neither of which the trial judge referred to in her reasons. On September 11, 1850, mere days after the Treaties were signed, A.W. Buchanan, the Hudson Bay Company Post Factor at Sault Ste. Marie, wrote to George Simpson, the Governor of the Hudson Bay Company:
The terms of the treaty are that the Indians are to receive £4,000 now to be divided amongst the whole of them, and £1,000 are to be paid them annually for ever, liable to be increased until the sum amounts to £1 for each Indian should sales of land be made to afford that sum.
145Jean-Philippe Chartrand, Ontario’s expert witness, testified that while Buchanan was nearby and was responsible for provisioning the Anishinaabe encamped at the Treaty Council, he was not a witness to the negotiation or execution of either Treaty. Mr. Chartrand agreed that Buchanan “seems to be recording not what happened but … Robinson’s first offer”, which was not the one the First Nations accepted.103 The trial judge did not err in not referring to this document or in arriving at an interpretation inconsistent with it.
(iv) Correspondence Between Bruce and Robinson
146The second account to which Ontario refers is from Colonel Robert Bruce, dated October 16, 1851. Bruce forwarded to Robinson a petition from the Lake Huron Chiefs asking the government to consider distributing annuities based on traditional land areas rather than on population. Bruce did not appear to support the petitioners. He commented: “The following extract from the Treaty seems to show conclusively that the distribution was to be per capita & not as suggested by the Petitioners” (emphasis in the original). Bruce stated that his impression was “gathered from your report, the treaty itself and the numerical lists transmitted as a guide for the distribution of annuities.” According to the editors of the British Colonist Newspaper, Col. Bruce did not “attend the treaty.”
147Robinson responded to Bruce:
I can only say that the Treaty made by me with the Indians last year was based on the same conditions as all preceding ones I believe. These conditions even fully explained in Council & are also clearly expressed in the Treaty.
Nothing was said by the Chiefs [illegible] of the nature mentioned in the extract you sent me & all seemed satisfied both at the signing of the Treaty & payment of the money with the terms on which I concluded the Surrender by them to Her Majesty.
148Robinson’s response does not support Ontario’s interpretation. His answer addressed the manner of distribution of annuities among the Chiefs, which is what he was asked about. Robinson confirmed that the distribution was to be based on the population of each Chief’s community, not the area of land that each Chief had surrendered on behalf of his community.104 The model of distribution that Robinson described is not inconsistent with the trial judge’s interpretation. More importantly, neither Bruce’s inquiry nor Robinson’s response addressed the operation of the alleged cap in the augmentation clause.
(v) The Newspaper Article
149Ontario points to an article published in the British Colonist Newspaper on October 1, 1850, containing an account of the Treaty Council, provided by an individual who was present. An extract from an American newspaper, with details of the Robinson Treaties, was printed in the same edition. Below the eyewitness account, the editor comments:
The terms, as mentioned in the [American] extract first alluded to are, we believe, nearly correct, except that any future increase to the annuity, which the sale of the ceded territory may enable the Government to make, is limited to four dollars a head.
150The provenance of this information is unclear. The fact that it follows an eyewitness account does not mean that this comment came from the eyewitness. In the absence of evidence about where the editor got this impression, it sheds no light on the Crown’s intention in entering the Treaties.
(ii) The Post-Treaty Evidence
151The post-Treaty evidence consists of records of requests that the annuities be increased to $4 per person, consideration of those requests by officials, petitions for the payment of arrears, requests for further increases, the 1893 Affidavit of John Mashekyash, and records of the arbitration between Canada, Ontario and Quebec.
152According to Ontario, the documents it relies on show that Crown actors and other non-Indigenous individuals unequivocally understood the Crown’s obligation as being limited to $4 per person, subject to the possibility of a discretionary increase. Ontario argues that the trial judge failed to take these documents into account and that her interpretation is inconsistent with this evidence of the Crown’s intentions and understanding. Ontario argues that this is an error in principle that requires reversal.
(i) The Governing Principles on the Use of Post-Treaty Evidence in Treaty Interpretation
153Temporal proximity is not required for post-treaty evidence to be admissible, but evidence from shortly after treaty formation is more likely to reveal the parties’ interests and intentions. As Lamer J. noted, “the subsequent conduct which is most indicative of the parties’ intent is undoubtedly that which most closely followed the conclusion of the document.”105
154Post-treaty evidence and evidence of the parties’ subsequent conduct can play a role in treaty interpretation but must be treated with “extreme caution.”106 In West Moberly,Smith J.A. (dissenting) referred to post-treaty events and conduct but noted that they mostly had “limited relevance to the issue of the common intention of the parties to the Treaty in 1899 unless they involve the Treaty parties or conduct that is probative to the intention of a Treaty party.”107
155In Lac La Ronge, Vancise J.A. adopted the trial judge’s statement in that case:
It is very useful to read what a signatory said about a treaty provision at or about the time when the document was executed. It is equally useful to know whether or not subsequent conduct by other people accorded with what was said. However, it is of no value to learn that some person, fifty years later, acted differently based on his or her own personal reading of the provision in the treaty. That conduct has no link to the contemporaneous historical circumstances and therefore should not be admitted.108
156The intervener Biigtigong Nishnaabeg First Nation argues that the risks of relying on subsequent conduct in interpreting contracts, as identified by Strathy C.J.O. in Shewchuk,109are also present in the treaty context. Tools developed by the court for interpreting contracts are to be applied to treaties only cautiously, particularly historical treaties. We do not find it necessary to borrow from the contract context in this instance.
(ii) The Principles Applied
157The trial judge recognized that post-treaty evidence can assist in depicting “how the parties understood the terms of the Treaties.”110 However, she noted that “[t]he weight to be attributed to the post-treaty record will vary in each case and will depend on the nature and context of the accounts and conduct.” She considered the frailties of the post-Treaty evidence and concluded:
[T]he post-Treaty record, both written and conduct, is vague, inconsistent, and conflicting. It is of limited assistance to the exercise of searching for the parties’ common intention. It shows that different people at different times and places held different understandings of the Treaties’ promise.111
158The trial judge did not err in her assessment of the post-Treaty evidence. She was not obliged to refer to every document on the record, which would have been virtually impossible given the volume of evidence before her.112 More importantly, the evidence that Ontario now attempts to rely upon is incapable of establishing that the trial judge erred in determining Crown intention.
159The Robinson Treaties were signed in 1850. Of the remaining post-Treaty documents that Ontario relies upon, only two were written prior to 1873. The arbitration documents, on which Ontario places particular emphasis, date from the 1890s. This lack of temporal proximity renders most of the post-Treaty evidence of doubtful probative value, an assessment that is borne out upon consideration of other factors.
160Ontario has not demonstrated any connection between the post-Treaty evidence it relies upon and the Crown’s intentions or interests on the date the Robinson Treaties were signed. The documents do not recount Treaty negotiations or conversations with Robinson before or after the Treaty Council. They do not describe the problems facing the Crown in 1850 or the policies the Crown was pursuing in response.
161Instead, much of Ontario’s evidence consists of personal interpretations of the augmentation clause made by individuals who had no connection with the formation of the Treaties.
162In a letter written in 1858, Richard Carney, an Indian Agent, described visiting the Garden River settlement and talking with the Chiefs there. Carney reported explaining to the Chiefs that the annuity “was not to exceed Four Dollars”. He stated that he gave this explanation after he “asked for a sight of the Treaty”. This was his interpretation of the Treaty, nothing more.
163Post-Treaty evidence must also be read carefully in its particular context, which includes the wider historical context and the specific context in which a document was created.
164The 1858 Pennefather Report cited the Treaty text and expressed “decided regret, that a Treaty shackled by such Stipulations, whereby a vast extent of Country has been wrung from the Indians for a comparatively nominal sum, should have received the sanction of the Government.”113
165Ontario argues that no such regret would have been necessary if the augmentation clause was to operate as the trial judge found. But this is an anachronistic reading; the reference to “a comparatively nominal sum” must be read in its historical context. The authors appeared to believe, eight years after the Treaties were signed, that no increase in the annuity was yet warranted.114 There was, at that point, no reason to believe that revenues would ever warrant a significant increase in the annuity. Viewed in that historical context, the Treaties were not seen as a good deal for the Anishinaabe, even with the prospect of future, uncapped augmentation.
166Context is also relevant to post-Treaty evidence relating to Anishinaabe requests for increases in the annuities. The trial judge correctly found that the petitions must be read in their historical and cultural context:
Dr. Bohaker testified, and Mr. Chartrand agreed, that these petitions could be labelled “pity speeches”, a term historian[s] use to describe the use of metaphor to ask relations to meet their obligations within the ongoing relationship. One would not expect a pity speech to set out the full scope of the obligations arising from the treaty relationship, but rather to make modest requests that would remind the treaty partner of their promise to care for the other.115
167The trial judge cited Mr. Chartrand’s evidence that “the Anishinaabe were ‘modest’ and ‘diplomatic’ when making requests under the Treaties.”116 That the Anishinaabe, in 1873, asked only for $4, and that non-Indigenous actors responded to those requests, cannot demonstrate that the Anishinaabe were not ever entitled to more.
168Simon Dawson, a Member of Parliament, wrote to the Governor-General’s Secretary in 1873 that “the lands ceded have become sufficiently productive to warrant the increased payment of at least $4; if not, of such further sum (over and above the $4) as Her Majesty may be graciously pleased to order, as provided for in the above cited clause of the treaty.”
169Letters from E.B. Borron, a Member of Parliament, in 1874 and 1875, urged Ministers in the Department of the Interior to pay the “full amount of annuity stipulated for” in the Treaties, at $4. It is unclear how he reached this interpretation. Justice Minister Edward Blake responded with his opinion on July 7, 1875, based on “the papers laid before the undersigned, as well as oral information of the Minister of the Interior” (to whom Borron had written).117 D. Laird, Minister of the Interior, then advised, on July 12, 1875, that he “concurs in the views expressed in the annexed report of the Honorable the Minister of Justice” and referred to Blake’s opinion that the Anishinaabe were “entitled, under the Treaty of 1850, to the maximum amount of annuity thereby stipulated, namely $4 per head.” The resulting federal OIC, which increased the annuities “to the maximum amount of annuity thereby stipulated, namely, $4.00 per head”, was expressly based on both Blake’s opinion and Laird’s report. These writers appear to take their interpretations either directly from the Treaty text, or from one another, not relying on information about the intentions or interests of the Crown when the Treaty was formed.
170Eight years after his first letter, Dawson wrote again. In his letter to Col. C. Stuart, dated October 7, 1881, he referred to the “full amount” of the available annuity, and to the payment of arrears on the $4 amount as providing “the full benefit of the stipulation throughout the whole period”. He did so based on his own interpretation of the text and other interpretations he had read. He began his letter with the words: “By this Treaty … it was stipulated as follows”, before quoting the augmentation clause. He then continued:
The language is clear and on reference to the official correspondence, it will be seen that it is nowhere denied, but on the contrary, admitted on all hands, that from the time the payment of four dollars per head could have been made from the revenue of the ceded territory, without loss to the Government, the Indians were clearly entitled to have their annuities augmented to that amount.
Dawson did not base his interpretation, as reflected in either his 1873 or 1881 letters, on any evidence, beyond the Treaty text, as to the interests or intentions of the Crown at the time of Treaty formation.
171Next, on January 9, 1884, Charles Skene, an Indian Agent, recounted his discussion with Chief Solomon James and other Chiefs. He told them that “$4 was the utmost sum to be given as annuity”, and their response “was that it is not so”. He then “referred to the written copy of the Treaty sent to me by the Department”. Again, it appears likely that his interpretation of the Treaties came from reading the text. This evidence is equivocal, in any event, since the First Nations representatives denied the cap.
172Ontario argues that the interpretations expressed by these writers are relevant because, in order to find the Crown intention to have been contrary to these interpretations, “one would have to accept (in the absence of evidence) that this interpretation was intended by the Crown at the time of ratification, but then almost immediately forgotten by the bureaucracy charged with implementing the Treaties.”
173On the contrary, there is no evidence to show, and no reason to believe, that in the 23 years between the promise being made and the Anishinaabe complaints that sparked discussion and action, knowledge relevant to the Crown’s intentions and interests was communicated, discussed, or passed among bureaucrats.
174Instead, the evidence suggests that the Treaties were set aside and largely forgotten for two decades. Only in 1873, when they were faced with complaints, did the responsible bureaucrats read the augmentation clause and reach their own understanding of the text. The resulting documents are therefore of very little probative value in determining what the Crown’s intentions were in 1850.
175Ontario points to the 1893 affidavit of Elder John Mashekyash, of Batchewana First Nation, who was present at the Treaty negotiations. The trial judge assessed that evidence and concluded that “it would be risky to give much weight” to it given the frailties of memory and Mashekyash’s presence only in the Huron negotiations.118 She added that his was not evidence of “any widespread understanding of the Huron Chiefs at the time the Robinson Huron Treaty was signed.” This assessment was well within the trial judge’s remit.
176Finally, Ontario placed particular emphasis on documents relating to the financial dispute between Canada, Ontario and Quebec regarding responsibility for the Crown’s annuity obligations. The decisions of the arbitrators in that dispute were reviewed by the Supreme Court of Canada and the Judicial Committee of the Privy Council.119 The trial judge did not refer to this group of documents, and for good reason. They provide little, if any, assistance in understanding the Crown’s intentions or interests at the time of Treaty formation. The documents exhibit the frailties of being neither proximate nor connected to Treaty formation. The context in which they were written calls for particular caution in relying on them.
177Vancise J.A. cautioned, in Lac La Ronge, against reading subsequent conduct “not directly related to the interpretation of the Treaty”, including “compromise” decisions, as a “demonstration of the intention of the parties at the time the treaty was negotiated and signed.”120 Records that were not aimed at interpreting the augmentation clause must be read with a sensitivity to the context of the documents and the objectives the writer sought to achieve.
178The main issue in dispute in the arbitration was which of Canada, Ontario or Quebec bore responsibility for paying the Robinson Treaty annuities. The parties to the arbitration referred to $4 as the “full” or “maximum” amount of the annuity, and Justice Burbidge, one of the arbitrators, found that “[a]ny increase beyond that would have been a matter of grace.”121 Neither party raised the possibility that the $4 stipulation did not cap the annuities. While there might have been “careful scrutiny” of the augmentation clause in the arbitration, that scrutiny was, on the part of the paying parties, aimed at advancing each party’s case against the others and, on the part of the arbitrators, limited to considering the arguments of the parties. They were not focused on Anishinaabe entitlements.
179There was a lively debate during the arbitration as to whether the $4 per person limit was based on the Anishinaabe population at the time the Treaties were signed or on the population at the time the annuity was paid. Mr. Clark, counsel for Ontario at the arbitration, argued that “it is apparent on the face of the Treaty that the maximum liability of the Province under that covenant in any event is 1422 [population at the time of Treaty formation], multiplied by 4”, all of which would be paid to the Chiefs, who then “divided it as they chose”.122
180Mr. Clark’s understanding, which differs from the one Ontario now claims to be self-evident, was earlier expressed by William Spragge in 1873. Spragge’s report, drafted in response to petitions from the Anishinaabe, referred to $4 as the “maximum amount per head named in the treaties”. Ontario argues that Spragge, having been a Crown official since 1847, was aware of the circumstances of the Treaty negotiations. However, in a letter preceding his report, he gave his opinion that the annuities were only to be augmented based on the First Nations’ population when the Treaties were signed.123 His adoption of this interpretation, which no party to these appeals currently endorses, significantly undermines the value of his report as an aid in interpreting the Treaties. It also suggests that Spragge had no special knowledge of the Treaty negotiations.
181It is also worth noting that, to the opposite effect, some Crown actors expressed, albeit cautiously, the view that more might be owed to the Anishinaabe. Dawson, in his 1881 letter, wrote that the sum of the arrears on the $4 annuity, “although considerable, is not all the Indians may fairly claim or are justly entitled to”, before referring to the graciousness part of the augmentation clause. He then referred to other bands who receive a higher annuity and also “carpenters’ tools, twine for nets, farming implements and cattle.”
182On June 17, 1893, E.L. Newcombe, a Deputy Minister, wrote to Lawrence Vankoughnet, Deputy Superintendent General of Indian Affairs, in reference to the augmentation clause. Newcombe stated, after quoting from the augmentation clause:
The portion of the above excerpt to which I wish to have particular attention called is that which describes the additional annuity, over and above one pound per caput which may be paid as “such further sum as Her Majesty may be pleased to order.” The Department has for some years past paid the Indians under these treaties $4 per capita, the mount necessary to enable it to do so having been voted annually by Parliament, but it is considered that, owing to the immense revenue derived from the sales of land and timber within the territory ceded by the Indians under the above treaties to the Crown, the amount of annuity might fairly be increased to such further sum as Her Majesty may be pleased to order.
183In response, Vankoughnet stated that “the point to which you refer will not be lost sight of” but stated also that “it is very questionable whether the provision in these treaties to which you refer can be made the basis of any legal claim against the Province of Canada.”
184While these documents do not support the trial judge’s interpretation, they do undermine Ontario’s argument that the post-Treaty evidence demonstrates one unequivocal understanding of the augmentation clause among Crown officials.
(iii) Conclusion on the Trial Judge’s Treatment of the Evidence Concerning Crown Intention
185The trial judge did not err in her treatment of the evidence of the Crown’s intentions upon entering the Robinson Treaties or in determining the common intentions of the Treaty parties.
186To be helpful, post-treaty evidence must be capable of shedding light on the intention or interests of one or more of the parties at the time the treaty was signed. The extent to which a document does so will depend not only on its contents, but on its temporal proximity to treaty formation, its connection to treaty negotiations, and the context in which it was created. Taking these factors into account, the post-Treaty evidence upon which Ontario relies provides little assistance and the trial judge did not err in not relying on it.
187The documents proximate to Treaty formation on which Ontario relies are consistent with the trial judge’s interpretation of the augmentation clause. The post-Treaty evidence, on which Ontario largely focused its submissions, is incapable of establishing a contrary Crown intention. The trial judge did not make a palpable and overriding error in her treatment of this evidence.
(b) The Trial Judge Did Not Err in Her Determinations on the Existence and Extent of Crown Discretion in the Augmentation Clause
188Ontario’s second basic argument on the trial judge’s interpretation of the augmentation clause is that she erred in finding that the Crown’s discretion under the augmentation clause was not unfettered.
189To recall the context, Ontario’s position is that the $4 per person amount specified in the Treaties is a “hard cap” that fixes both the annuity paid to entitled individuals and the total amount of the annuity payable. Ontario submits that the Crown has unfettered discretion as to when and whether it will increase the per person annuity, and therefore the total annuity paid, beyond the $4 per person cap.
190At trial, both Ontario and Canada submitted that the law gave them “unfettered discretion concerning how they will meet their treaty obligations.”124 Canada has not appealed the judgments below. On appeal, Canada agrees with the trial judge’s finding that the Crown is obliged, under the Treaties, to increase the annuities beyond $4 per person. Canada now submits that the Crown retains discretion in fulfilling this obligation but that this discretion is not unfettered.
191We begin by setting out the governing principles concerning the existence and scope of governmental discretion. We next summarize the trial judge’s decision concerning Crown discretion and then apply the governing principles to Ontario’s arguments.
(i) The Governing Principles Concerning Discretion
192In the seminal Baker decision, L’Heureux-Dubé J. noted: “The concept of discretion refers to decisions where the law does not dictate a specific outcome, or where the decision-maker is given a choice of options within a statutorily imposed set of boundaries.”125 It is now trite law that “there is no such thing as absolute and untrammelled ‘discretion’”.126 Where discretion is granted by statute, that discretion, said L’Heureux-Dubé J., “must be exercised in accordance with the boundaries imposed in the statute, the principles of the rule of law, the principles of administrative law, the fundamental values of Canadian society, and the principles of the Charter.”127 These boundaries set a reasonable “margin of manoeuvre” for a decision-maker exercising discretion.128
193These principles apply with necessary modifications to the exercise of Crown discretion related to treaties with First Nations. The most significant constraints on the Crown in the context of this case are the Treaty promises made by the Crown, s. 35 of the Constitution Act, 1982, including its reconciliatory imperative, and the honour of the Crown.
(ii) The Trial Judge’s Treatment of Crown Discretion
194The trial judge found that the promise in the augmentation clause to increase the annuity is not discretionary but mandatory; the $4 cap is only a cap on annual payments to individuals and does not limit the total annuity payable under the Treaties; and the Crown has discretion in the implementation of the Treaty promise, including when and how it provides information to the Anishinaabe to assess the reasonableness of the Crown’s calculations of net Crown revenues129 and whether to raise the $4 cap on the annuity payable to individuals.130 She stated: “The discretion is not unfettered and is subject to [judicial] review”, and noted that Crown discretion in the implementation process “must be exercised honourably and with a view to fulfilling the Treaties’ promise.”131
(iii) Ontario’s Arguments
195Ontario makes four arguments in support of its position that the power to increase annuities is unfettered: the first is based on the text of the graciousness clause and its location in the augmentation clause; the second is that the decision to increase the annuities is not justiciable; the third is that the trial judge erred in her evidentiary finding on the role of discretion in determining the common intention of the Treaty parties; and the fourth relates to the honour of the Crown. We address the first three in turn and the honour of the Crown under the second issue, which follows immediately.
(i) The Textual Argument
196Ontario argues that the phrasing of the graciousness clause in the augmentation clause is a particularly potent conferral of unfettered discretion on the Crown. The graciousness clause provides: “or such further sum as Her Majesty may be graciously pleased to order”. This language evokes the royal prerogative. Ontario argues that the language of the graciousness clause modifies the entire augmentation clause, making any increase to the annuity beyond its current level completely discretionary.132
197We disagree for textual reasons and for reasons of principle.
198The trial judge’s interpretation of the augmentation clause is consistent with and is supported by the text of the augmentation clause. The structure of the augmentation clause makes it clear that the graciousness clause applies only to the per person annuity, not to the collective annuity. It does not modify the entire augmentation clause. To see this, it is helpful to depict the structure of the augmentation clause in its constituent parts, with some explanatory notes and emphasis added.
199The collective annuity promise comes first:
[F]or the further perpetual annuity of six hundred pounds of like money, the same to be paid and delivered to the said Chiefs and their Tribes at a convenient season of each year …
Her Majesty and the Government of this Province, hereby promises and agrees to make, or cause to be made, the payments as before mentioned….
200The main text of the augmentation clause states:
Her Majesty, Who desires to deal liberally and justly with all Her subjects, further promises and agrees that should the territory hereby ceded by the parties of the second part at any future period produce such an amount as 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,
201Then comes the first proviso, which specifies the amount paid to individuals and contains the graciousness clause:
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;
202Then comes the second proviso followed by the diminution clause:
and provided further that the number of Indians entitled to the benefit of this treaty shall amount to two-thirds of their present number, which is fourteen hundred and twenty-two, to entitle them to claim the full benefit thereof; and should they not at any future period amount to two-thirds of fourteen hundred and twenty-two, then the said annuity shall be diminished in proportion to their actual numbers.
203Structurally, the textual breakdown shows plainly that the graciousnessclause does not apply to the entire augmentation clause but only to the first proviso, which sets the annuity for individuals.
204Textually, in terms of the language, Crown compliance with the augmentation clause is mandatory because the clause expressly states that “should” the ceded territory produce sufficient revenue to enable increasing the annuity “without incurring loss”, “then and in that case the same shall be augmented from time to time”. Up to that point in the text of the augmentation clause, the only antecedent to which “the same” could relate is the collective annuity already mentioned, being “the further perpetual annuity of six hundred pounds of like money”. In our view, because the graciousness clause is part of the first proviso, it cannot dominate the augmentation clause and reduce its mandatory wording (“shall be augmented”) into a gratuitous exercise of the Crown’s unfettered discretion (“such further sum as Her Majesty may be graciously pleased to order”), as Ontario argues. The graciousness clause applies only to the per person annuity in the first proviso (“the amount paid to each individual”), which is capped in the text at $4.
205As a matter of principle, there is, in any event, no such thing as an unfettered discretion, as we have already established.
(ii) Justiciability
206To set the context for this issue, we first set out Ontario’s position, next the governing principles on justiciability, and then apply the principles to Ontario’s argument.
Ontario’s Position on Justiciability
207Ontario invokes the doctrine of justiciability, in part, to reinforce its claim that Crown discretion under the augmentation clause is unfettered. Ontario attacks the trial judge’s finding that the augmentation clause requires the Crown to pay a “fair share” of net Crown resource-related revenues on the basis that “[n]othing in the historical record suggests that this abstract concept was discussed during the Treaty negotiations, much less agreed upon.” Accordingly, Ontario argues: “The absence of common intention on what constitutes a ‘fair share’ also implies that should the parties fail to reach agreement on this concept, the courts will have to create a definition in a legal vacuum.” Ontario asserts: “What is ‘fair’ in the abstract, considered apart from legal principles or common intention, is not a justiciable question; it is a moral or policy question on which many different views and perspectives are possible.” The question does not have “a sufficient legal component to be justiciable.”
208Ontario’s argument concludes dramatically:
In defining what is a “fair share” under the judgments below, the courts would be making policy decisions with respect to limited Crown finances, thereby entering a field that Canadian courts have appropriately viewed as being outside the proper function of the judiciary. In the result, a Crown discretion to increase annuities has been replaced in the judgments below by a judicial discretion in relation to Crown finances that is not grounded in common intention or legal principles.
The Governing Principles Concerning Justiciability
209The doctrine of justiciability imposes limits on judicial review of executive action. It is based on the sense that there are public policy issues that are beyond the jurisdiction of the courts. Stratas J.A. noted:
In rare cases … exercises of executive power are suffused with ideological, political, cultural, social, moral and historical concerns of a sort not at all amenable to the judicial process or suitable for judicial analysis. In those rare cases, assessing whether the executive has acted within a range of acceptability and defensibility is beyond the courts’ ken or capability, taking courts beyond their proper role within the separation of powers.133
Examples of such rare cases would include the deployment of military assets, entering into foreign treaties, and addressing homelessness.
210The issue of addressing homelessness was raised in Tanudjaja,where the court found that there was “no sufficient legal component to engage the decision-making capacity of the courts”, and that “[i]ssues of broad economic policy and priorities are unsuited to judicial review.”134 The application in that case asked the court “to embark on a course more resembling a public inquiry into the adequacy of housing policy.”135 The court noted, “the issue is one of institutional competence [and] whether there is a sufficient legal component to anchor the analysis” and concluded that the application was not justiciable.136
The Principles Concerning Justiciability Applied
211In our view the doctrine of justiciability has no application to this case, for three reasons. First, here the court is not reviewing executive action in the abstract. The court’s task is to interpret the augmentation clause in the Treaties in the context in which they were negotiated. The interpretation and enforcement of treaty obligations is core judicial business.137
212Second, Ontario’s justiciability argument does not turn on the language of the augmentation clause but on the trial judge’s adoption of the expression “fair share”. However, Ontario’s justiciability argument cannot be based on the result of the trial judge’s interpretation. Either a question is justiciable or it is not. If it is justiciable, then the court’s answer might be wrong, but the result cannot logically convert the question from one that is justiciable into one that is not.
213Ontario’s argument must be treated as an assertion that the trial judge erred in adopting the term “fair share”, not that the interpretation is not justiciable. As we will explain below, we agree that it was unhelpful for the trial judge to adopt the concept of “fair share”, but her doing so cannot form the basis of a justiciability argument.
214Third, and relatedly, there is a sense in which Ontario is making an argument based on the possibly catastrophic impact of a large judgment on the fiscal state of the Province, thereby reducing its capacity to deal effectively with its other responsibilities. We draw this inference from the language of Ontario’s factum: “the courts would be making policy decisions with respect to limited Crown finances, thereby entering a field that Canadian courts have appropriately viewed as being outside the proper function of the judiciary.” But this is not what the court is tasked to do nor what it will do. In the end there might be a financial judgment that Ontario will have to pay, like any party that is in breach of an agreement. The court is simply requiring the Crown to comply with the Treaties. Accordingly, Ontario is making an argument based solely on consequences, which is not a true justiciability argument.
215For these reasons, we do not consider justiciability to be a viable basis on which to find that the augmentation clause gave the Crown unfettered discretion over whether and when to increase the annuities.
(iii) The Argument on the Evidence as to the Nature of the Crown’s Discretion
216The trial judge found that the promise in the augmentation clause to increase the annuity is mandatory, not discretionary, but that the Crown has a measure of discretion in the implementation of the Treaty promises. Ontario attacks the evidentiary basis for her finding that the promise to increase the annuity is not discretionary.
217In the course of her reasoning, the trial judge found there to be no historical record that Robinson explained the notion of discretion to the Anishinaabe. She stated:
The Robinson Treaties use formal English and legal terminology. I am not at all convinced that the presence of interpreters could or should have given Robinson confidence that the Chiefs understood the concepts of discretion, royal prerogative, or Her Majesty’s graciousness, if such concepts had been embedded into the Treaties. And, therefore, such concepts could not have informed the common intention of the parties.138
218Ontario bases its challenge on the last sentence: “such concepts could not have informed the common intention of the parties.” Ontario asserts that the trial judge’s finding that discretion was not understood by the Chiefs is inconsistent with her plain finding that the augmentation clause gave the Crown discretion over increases to the $4 cap on distribution to individuals and discretion in implementation. Read literally, that sentence (“such concepts could not have informed the common intention of the parties”) would mean that no element of the Treaties could engage the Crown’s discretion because Crown discretion did not form part of the common intention of the Treaty parties.
219Seeking to avoid the risk that such a reading would pose to its argument that the Crown has plenary discretion under the Treaties, Ontario essentially makes a two-step argument. The first step is that the trial judge was palpably wrong and Robinson successfully conveyed the concept of Crown discretion at the Treaty Council. The second step is that Crown discretion, the meaning of which Robinson correctly conveyed and which then formed part of the common intention of the parties, was unfettered. We agree with the first step, but Ontario’s argument falters at the second.
220Relevant to the first step, Ontario submits that the concept of discretion in a leader is not inherently difficult to explain, that there were interpreters and advisers at Treaty Council who were not Crown actors, and that the evidence from Elder Rita Corbiere, a contemporary witness, contradicts the trial judge’s assertion that the Anishinaabe would not have understood the concept of discretion. We agree that Robinson is likely to have conveyed, and the Anishinaabe are likely to have understood, the concept of discretion.
221However, this is not a palpable and overriding error that undermines the trial judge’s interpretation. Instead, in our view, the correct analysis is simple: the trial judge simply misspoke. What she meant to say was not, “such concepts could not have informed the common intention of the parties” but instead, “such concepts of unfettered discretion could not have informed the common intention of the parties.” Most obviously, in light of her numerous references to ongoing Crown discretion, the trial judge did not intend to exclude all Crown discretion, just unfettered discretion.
222This reading of the trial judge’s reasons is supported by the record. In its written closing submissions on the motions, under the heading “Common Intention”, Ontario argued that Robinson would not have understood the augmentation clause as creating an obligation to increase annuities beyond an amount equal to $4 per person under any circumstances.139 Because Robinson was motivated to accurately communicate the meaning of the Treaties at Treaty Council, he took steps through skilled interpreters to explain the Treaties so as to avoid any misunderstanding. Ontario argued that he was successful in doing so. Ontario pointed to Robinson’s statement, in his Treaty Report, that he “had no difficulty in making [the Anishinaabe] comprehend” the augmentation clause. Ontario argued that Robinson was better placed than anyone alive today to assess whether he had successfully communicated the meaning of the augmentation clause.
223The trial judge asked: “What can we take from Robinson’s many references in his diary and Official Report that the Chiefs were satisfied after the Treaties were read out, interpreted and explained to them?”140 Contextually, we read this section of the trial judge’s reasons as her response to Ontario’s arguments that Robinson’s supposed understanding of the augmentation clause – that the Crown’s discretion to augment was unfettered – should be assumed to have been communicated successfully to the Anishinaabe.
224The trial judge noted Ontario’s submission that “the Anishinaabe had the benefit of multiple interpreters who were skilled cross-cultural translators.”141 According to one expert, the interpreters at the Treaty Council “were a genuine part of the multicultural world of the upper Great Lakes region.” The trial judge accepted that the interpreters explained the “shall not exceed £1” provision in the augmentation clause and that there is no record of any complaints.142 She added: “There is no record of Robinson himself explaining the ‘cap’, the notion of discretion, or royal prerogative.”143
225The trial judge then described the difficulties of interpreting legal terms to lay people and the large cultural gap between the Treaty parties, before making the comments, quoted earlier, in which Ontario claims she erred.
226Contextually, however, in making these comments, the trial judge is best understood to be noting that the fact that the augmentation clause was interpreted or explained to the Anishinaabe does not mean they would have understood discretion in the augmentation clause as operating in the manner Ontario now claims, that is, as an unfettered Crown discretion, “not subject to any defined set of factors”, over increases beyond $4 per person.144
227The trial judge cited Elder Corbiere’s testimony “that the Anishinaabe lived with notions of what they expected of their leaders: to be generous, to live in a good way, to do right by the people.”145 Elder Corbiere’s testimony strongly suggested that the Anishinaabe would not have understood sole or unfettered discretion in a leader, which is the form of discretion that Ontario argues was embedded in the augmentation clause and successfully communicated to the Anishinaabe. This concept, of a leader choosing to act arbitrarily without regard for the needs, requests, or expectations of others, could not have been communicated to the Anishinaabe because it is not consistent with Anishinaabe conceptions of leadership or their expectations of the Crown. It is therefore unlikely to have been what the Anishinaabe understood from an interpretation and explanation of the augmentation clause.
228The trial judge was entitled to rely on this evidence and to draw from it the inference that the Anishinaabe could not have understood the concept of a leader exercising discretion arbitrarily because it would have been incomprehensible to the Anishinaabe that a leader, including the Queen, would assert unfettered discretion, and be empowered to act in a manner unbound by the principles described by Elder Corbiere.146 The trial judge did not accept that the Anishinaabe would have understood the augmentation clause as permitting the Crown to refuse to increase the annuity after it reached the equivalent of $4 per person, no matter the revenues produced by the land.
229The trial judge did not err in assessing the Anishinaabe understanding of Crown discretion. Her findings on common intention and her interpretation of the augmentation clause to the effect that Crown discretion was not unfettered were not based on Elder Corbiere’s statements alone, but on a careful examination of the historical and cultural context in which the Treaties were negotiated and signed. This was completely within the trial judge’s remit and we do not discern an error.
230The trial judge did not err in her analysis of the form and content of the Crown’s discretion, or the First Nation’s understanding of the scope of that discretion, contrary to Ontario’s argument.
C. Issue Two: Did the Trial Judge Err in Finding that the Doctrine of the Honour of the Crown Obliges the Crown to Increase the Annuities as Part of its Duty to Diligently Implement the Treaties?
231We begin with the governing principles, next set out the trial judge’s reasons, the positions of Ontario and Canada, and then our analysis. The context is set by Ontario’s position that, in the circumstances, the honour of the Crown is procedural only and does not give rise to fiduciary duties to the Treaty First Nations.
(1) The Governing Principles Concerning the Honour of the Crown
232The honour of the Crown has been recognized as a legal principle applying to treaties since at least 1895,147 but its roots are far deeper.148 It is historically linked to the Royal Proclamation of 1763 (the “Royal Proclamation”)149 and engaged by s. 35 of the Constitution Act, 1982.150 In Haida Nation, McLachlin C.J. explained:
The historical roots of the principle of the honour of the Crown suggest that it must be understood generously in order to reflect the underlying realities from which it stems. In all its dealings with Aboriginal peoples, from the assertion of sovereignty to the resolution of claims and the implementation of treaties, the Crown must act honourably. Nothing less is required if we are to achieve “the reconciliation of the pre-existence of aboriginal societies with the sovereignty of the Crown”….151
233We repeat McLachlin C.J.’s strong statement: “The controlling question in all situations is what is required to maintain the honour of the Crown and to effect reconciliation between the Crown and the Aboriginal peoples with respect to the interests at stake.”152 The honour of the Crown is “always at stake” in the Crown’s dealings with Aboriginal people.153 According to McLachlin C.J., this statement “is not a mere incantation, but rather a core precept that finds its application in concrete practices.”154
234The honour of the Crown “infuses” the process of treaty interpretation,155 and is “an important anchor”.156 Further: “The Crown’s honour cannot be interpreted narrowly or technically, but must be given full effect in order to promote the process of reconciliation mandated by s. 35(1).”157 The honour of the Crown gives rise to justiciable duties.158 While not a cause of action in itself, 159 the honour of the Crown can also be the subject of a declaration.160
235Brian Slattery argues that in Haida Nationand Taku River, “we witness the emergence of a new constitutional paradigm governing Aboriginal rights” built around the doctrine of the honour of the Crown.161 In his book, The Honour and Dishonour of the Crown: Making Sense of Aboriginal Law in Canada, Jamie D. Dickson makes an extended argument that since Haida Nation, the doctrine of the honour of the Crown has begun to displace fiduciary duty as the principal means by which the court assesses Crown actions under treaties. He states:
[T]he fundamental conceptualisation of Crown obligations in Aboriginal contexts was entirely reset upon (a) explicitly, the core principle that the Crown is legally mandated to always act honourably in its dealings with Aboriginal peoples, and (b) implicitly, the notion that the regulation of the mischief of Crown dishonour involving Aboriginal peoples is the predominant, if not the exclusive, function of Aboriginal law.162
236The caselaw bears out Dickson’s prediction, flowing from Haida Nation, that in giving content to sparsely defined treaty promises courts will utilize the doctrine of the honour of the Crown, not fiduciary duty. He notes:
As the doctrinal anchor of Aboriginal law — as it was described by Justice Binnie in Little Salmon/Carmacks — the honour of the Crown principle describes the core mandate of this area of law — that the Crown is to act honourably in its dealings with Aboriginal peoples — and operates to give rise to specific and enforceable obligations, the breach of which by the Crown violates the anchor principle.163
237In Mikisew Cree (2018), Karakatsanis J. noted:
This Court has repeatedly found that the honour of the Crown governs treaty making and implementation, and requires the Crown to act in a way that accomplishes the intended purposes of treaties and solemn promises it makes to Aboriginal peoples…. Treaty agreements are sacred; it is always assumed that the Crown intends to fulfill its promises. No appearance of “sharp dealing” will be permitted….164
238In Haida Nation, McLachlin C.J. pointed out that: “The honour of the Crown gives rise to different duties in different circumstances.”165 In Manitoba Metis, McLachlin C.J. and Karakatsanis J. note that “[w]hat constitutes honourable conduct will vary with the circumstances”, and that “the duty that flows from the honour of the Crown varies with the situation in which it is engaged.”166 The incidents of the honour of the Crown that may apply include “a fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest”.167 It is instructive that in Manitoba Metis the court found that the honour of the Crown did not give rise to a fiduciary duty168 even though the honour of the Crown was breached.169
239As an example of the more nuanced approach, McLachlin C.J. noted in Haida Nation that:
[W]hile the Crown’s fiduciary obligations and its duty to consult and accommodate share roots in the principle that the Crown’s honour is engaged in its relationship with Aboriginal peoples, the duty to consult is distinct from the fiduciary duty that is owed in relation to particular cognizable Aboriginal interests.170
240The most common cases in which the court has imposed fiduciary duties on the Crown as an incident of its honour are those where the Crown controls the disposition of reserve property, including the taking up of reserve lands or lands subject to a treaty. Examples include Guerin, Grassy Narrows, and Southwind.171 There are also cases where the court did not rely on fiduciary duty in which the complaint was that the Crown had not given full effect to a treaty, including Marshall, or had not complied with the duty to consult.172
241The honour of the Crown demands the purposive interpretation of treaties by the courts and by the Crown.173 The Crown must act “diligently in pursuit of its solemn obligations and the honourable reconciliation of Crown and Aboriginal interests”174 and “diligently pursue implementation” of treaty promises175 in order to achieve their intended purposes.176 This duty of diligent implementation is “narrow and circumscribed”.177 Like the duty to consult, it is distinct from fiduciary duties. To fulfil the duty of diligent implementation, “Crown servants must seek to perform the obligation in a way that pursues the purpose behind the promise.”178 Implementation need not be perfect, but “a persistent pattern of errors and indifference that substantially frustrates the purposes of a solemn promise may amount to a betrayal of the Crown’s duty to act honourably in fulfilling its promise.”179
242These are the duties that arise from the honour of the Crown in relation to the promises made in the Robinson Treaties. The question then becomes whether the concept of fiduciary duty has any work to do that is not done by the honour of the Crown and its duty of diligent implementation. We address this question below.
(2) The Trial Judge’s Reasons
243The trial judge stated:
The honour of the Crown requires that the Crown fulfil their treaty promises with honour, diligence, and integrity. The duty of honour also includes a duty to interpret and implement the Treaties purposively and in a liberal or generous manner. The Defendants accept this characterization of their duties.180
244She added immediately: “As I have found, there is also an ad hoc fiduciary duty on the part of the Crown.”181 The trial judge often linked the honour of the Crown and fiduciary duties in her reasons without making any distinction between the two.182 The issue was squarely raised in argument183 but she sidestepped it, taking the view that it was not necessary to decide which of the honour of the Crown or fiduciary duty “has primacy over the other.”184 Her concern appears to be to leave open the possibility of equitable damages.185
245Finally, the trial judge noted: “Whether the Crown has consistently fulfilled its duties to purposively and diligently interpret and implement the Treaties or whether the Crown has breached its duties are not Stage One issues.”186 But she overcame this diffidence, making several strong statements:
Since 1850 the Crown has acted with unfettered discretion in their interpretation and implementation of the Treaties, in a way that has seriously undermined their duty of honour. This left the Treaties’ promise completely forgotten by the Crown.187
It seems to me that the real problem is not so much that the financial circumstances changed in the 168 years since the Treaties were signed; the real problem is that the augmentation promise was ignored for that entire period.188
[N]or should the Crown benefit from their neglect of the Treaties’ provisions for over 150 years and thereby escape their obligation of honourable implementation of the Treaties’ terms. At the implementation stage, the Crown is obliged, by virtue of the doctrine of the honour of the Crown, to purposively interpret and implement the Treaties’ terms.189
(3) The Position of Ontario on the Honour of the Crown
246Ontario makes two arguments concerning the honour of the Crown. The first is linked to its primary argument that the Crown has unfettered discretion to augment the annuities or to decline to do so. Consistent with that position, Ontario asserts that in exercising its discretion under the aegis of the honour of the Crown, the Crown has only procedural duties, which Ontario sets out in four propositions:
the Crown must engage in the exercise of the discretion upon request by a Treaty First Nation, and from time to time in any event;
the Crown should engage honourably with the Treaty First Nations in the exercise of the discretion, meaning that the process the Crown chooses to follow must uphold the honour of the Crown, and can be challenged on the basis that it failed to do so;
the Crown must engage with Treaty First Nations in relation to the analysis of net Crown resource-based revenues, including providing sufficient information to allow them to independently assess the analysis performed by the Crown; and
an honourable process includes providing Treaty First Nations with an explanation of any decision reached, though this would not require formal reasons.
247Ontario’s second argument is that the honour of the Crown does not require the imposition of fiduciary duties on the Crown respecting these Treaties and that the trial judge erred in imposing them.
(4) The Position of Canada on the Honour of the Crown
248Canada did not appeal the judgment and agrees that the Crown has Treaty obligations “to increase the promised annuity payments from time to time if Crown resource-based revenues from the Treaties’ territories permit.” Canada submits that the Crown “retains discretion with respect to the implementation and fulfilment of those obligations; but its discretion is not unfettered” and is subject to judicial review. The constraints include the terms of the Treaties, the duty of purposive treaty interpretation, the honour of the Crown, and the reconciliatory imperative of s. 35 of the Constitution Act, 1982. Canada did not address the relationship between the honour of the Crown and fiduciary duties.
(5) The Principles Concerning the Honour of the Crown Applied
249The trial judge stated that the honour of the Crown requires the Crown to fulfil the Treaty promises with honour, diligence, and integrity, including the duty to interpret and implement the Treaties purposively and in a liberal or generous manner.190 This is consistent with the authorities.
250The trial judge correctly found that “the Crown has a mandatory and reviewable obligation to increase the Treaties’ annuities when the economic circumstances warrant.”191 She specified that: “The economic circumstances will trigger an increase to the annuities if the net Crown resource-based revenues permit the Crown to increase the annuities without incurring a loss.”192 This is the core Treaty promise that must now be diligently implemented by virtue of the honour of the Crown.
251Consequently, we would not accept Ontario’s argument that, in this case, the honour of the Crown can be reduced to a series of procedural requirements. Where the honour of the Crown is involved, “fairness to the Indians is a governing consideration.”193 As Thomas Isaac notes, “[t]he notion of fairness in interpretation seemed to indicate, even at a relatively early stage, that the honour of the Crown was meant to ensure just outcomes, rather than solely procedural fairness.”194
252We agree with Ontario that the honour of the Crown does impose procedural requirements at least equal to those Ontario proposes. We would not go further in specifying these procedural requirements. They are properly the subject of rulings to be made in Stage Three of these proceedings.
253However, these procedural requirements are not all that the honour of the Crown requires. The honour of the Crown, together with s. 35, requires that the Crown diligently implement the Treaty promise. This is the standard against which the Crown’s incidental discretionary decisions in the implementation process are to be assessed. All of those decisions are subject to judicial review. The relevant question, on review, will be: “Viewing the Crown’s conduct as a whole in the context of the case, did the Crown act with diligence to pursue the fulfillment of the purposes” of the Treaty promise?195
254We turn to the issue the trial judge declined to resolve, which she expressed as which of honour of the Crown or fiduciary duty “has primacy over the other.”196 With respect, the honour of the Crown and fiduciary duty are not in competition. The honour of the Crown can give rise to fiduciary duties in circumstances where such duties are necessary and appropriate.
255The trial judge found the imposition of a fiduciary duty necessary, in part, to ensure the availability of equitable remedies. She noted that, in addition to the obligations imposed by the honour of the Crown, “a finding of a fiduciary duty may impose additional duties on the Crown, as well as open up an array of equitable remedies.”197 These are remedies that, the trial judge suggested, “at this time are not available under the principle of the honour of the Crown.”198 She found that the question of fiduciary duties could not “be ignored because a different model may be developed at some future point.”199
256In the particular circumstances, does the concept of fiduciary duty have any work to do that is not already being done by honour of the Crown? In Peter Ballantyne Cree Nation, the Court of Appeal for Saskatchewan endorsed Dickson’s view, set out above, that “the generalized fiduciary obligation (in form, a principle that calls for honourable conduct) has been largely replaced by the honour of the Crown principle which effectively mandates the same thing.”200 We agree.
257The “different model” to which the trial judge refers appears to be the honour of the Crown and the duty of diligent implementation. While the duty of diligent implementation has received only recent and isolated application as a basis for remedies in the treaty context,201 it “is not a novel addition to the law” and is “recognized in many authorities”.202 Where the duty is breached, a court may order remedies aimed at ensuring that the Crown fulfills its treaty promises.
258We agree with Hourigan J.A. that fiduciary duty has no work to do in this case that cannot be done by honour of the Crown alone. The development of the doctrine counsels against imposing fiduciary duties where they are not required, and they are not required in this case.
D. Issue Three: Did the Trial Judge Err in Finding There Was No Implied Term for the Indexation of the Annuities?
259Ontario submits that the trial judge erred in refusing to accept that the annuities paid pursuant to the Robinson Treaties should be indexed to mitigate the impact of inflation. Ontario argues that, although the Treaties do not contain any legally enforceable obligation to increase the annuities beyond a contractual $4 per person “cap”, applying the common-law test for implication of contractual terms, so as to add a proviso indexing that cap, would restore the purchasing power intended by the Treaty partners and would be consistent with the honour of the Crown. Canada takes the position that the trial judge was correct in declining to imply such a term. The Huron and Superior Plaintiffs see no need to imply indexing if the Treaties oblige the Crown to increase the annuity from time to time, when the revenues generated by the ceded lands permit the Crown to do so without incurring a loss.
(1) The Trial Decision on Indexation
260As noted, the Treaties provide that the annuity “… 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” (emphasis added).
261At trial, Ontario pleaded that “one pound Provincial currency”, equivalent to $4, should be indexed to mitigate inflation but, as discussed, took the position that this sum was a “cap” and that it has no obligation other than to consider augmenting the individual annuity over this indexed amount. The precise inflation-adjusted value of the cap would be left for the trial judge to determine at Stage Three of these proceedings. On appeal, Ontario acknowledges that an inflation-adjusted cap would be relevant both to Ontario and Canada’s continuing obligations under the Treaties and to any calculation of damages.
262Both the Huron and Superior Plaintiffs agreed that “one pound Provincial currency” should be indexed, but only if their principal argument – that the Treaties oblige the Crown to increase a collective annuity in step with increases to territorial revenue – were to fail. Canada took the position that, given inflation was unknown in 1850, the parties would not have turned their minds to the question of indexation and, thus, implying a term would be inappropriate.
263The trial judge was not persuaded that the parties would have agreed to an indexation clause, had the then-unknown concept of persistent inflation and erosion of purchasing power been explained to them at the time of the Treaties.203 This was just one of many unforeseen changes affecting the Treaty partners over the following 170 years.204 She observed that the Treaties contained both an augmentation clause and a diminution clause, intended by the parties to deal with changing circumstances.205 The Robinson Treaties were unique in providing for an augmentation of the annuities which, she found, were linked to increases in the territorial revenue and which would thereby adjust the future value of the annuities.206 She accordingly refused to imply a Treaty term for indexation of the annuities but noted that “[i]n treaties without an augmentation provision, different considerations could quite possibly result in different responses to this claim.”207
(2) Analysis
264There is no doubt that courts may imply terms into treaties on the basis of the presumed intentions of the parties, where necessary to give effect to treaty promises or where doing so meets the “officious bystander test”. In Marshall, the accused – a Mi’kmaq man – was charged with offences under federal fishery regulations. He asserted a treaty right to fish. The treaty contained a Mi’kmaq promise not to trade any commodities except with the managers of certain trading posts, known as truckhouses, or persons appointed by the Crown. The treaty did not contain any reference to a continued right to fish.
265Binnie J. observed:
Here, if the ubiquitous officious bystander had said, “This talk about truckhouses is all very well, but if the Mi’kmaq are to make these promises, will they have the right to hunt and fish to catch something to trade at the truckhouses?”, the answer would have to be, having regard to the honour of the Crown, “of course”.208
266And further:
This was not a commercial contract. The trade arrangement must be interpreted in a manner which gives meaning and substance to the promises made by the Crown. In my view, with respect, the interpretation adopted by the courts below left the Mi’kmaq with an empty shell of a treaty promise.209
267The court concluded the treaty at issue, in restricting the trade of fish, implied a continued right to fish in a manner sufficient to produce a moderate livelihood. As Binnie J. put it, “nothing less would uphold the honour and integrity of the Crown in its dealings with the Mi’kmaq people to secure their peace and friendship”.210
268In the commercial context, courts will consider whether an implied term is “necessary to give business efficacy” to the agreement.211 As noted in Energy Fundamentals Group Inc.:
Implication of a contractual term does not require a finding that a party actually thought about a term or expressly agreed to it. Often terms are implied to fill gaps to which the parties did not turn their minds….
On the other hand, a court will not imply a term that contradicts the express language of the contract or is unreasonable….212
Courts will generally not imply a term where the agreement’s language addresses the particular contingency addressed by the proposed implied term.
269In this case, the trial judge was correct to reject the proposal to imply an indexing term in the face of the parties’ choice, in the Treaties, to link increases in the annuities to the revenues generated by the ceded lands. There is no basis to supplant the augmentation clause with a judicially created indexing term which, over 170 years, could produce widely different results, particularly given the various possible formulae for indexation.
270Here, the Treaty beneficiaries are not left with “an empty shell of a treaty promise” in the absence of the proposed implied term.213 As we explain elsewhere, the Huron and Superior Plaintiffs retain a meaningful and enforceable Treaty right, subject to substantive judicial review, that accommodates the risk of inflation. The honour and integrity of the Crown demand that it uphold this promise, not the implied promise Ontario advances in its stead.
E. Issue Four: Did the Trial Judge Err in Her Approach to Remedies?
271We begin with several observations to set the remedial context facing the trial judge. First, the trial judge cited the patent deficiencies and omissions in these historical Treaties. Even though they were meant to establish relationships in perpetuity, the Treaties are “lean on details.”214 The trial judge noted that:
[T]he Treaties do not prescribe a protocol or a guide for the mechanics of implementing this promise (i.e. the frequency, method, or factors to be considered, the corresponding duties that arise, or the scope or limits of review). Therefore, while it is not controversial that the duties flowing from the honour of the Crown bind the Crown (irrespective of the nature of the promise), the specific duties that arise in this case are undefined on the face of the Treaties.215
272The trial judge observed that because the Treaties are perpetual, they “are not frozen at the date of signature.”216 But the lack of any effort to implement the augmentation clause in the Robinson Treaties, apart from the increase to the annuities in 1875, has resulted in a lack of guidance for future implementation:
The annuities were last increased in 1875. Therefore, regrettably, there is no set protocol, mechanism, or precedent for the process of considering increases to the annuities. Hence, the court and the parties must return to the shared goals, expectations, and understandings of the parties in 1850 and, based on those shared goals, expectations, and understandings, devise processes and procedures for the implementation of the Treaties’ promise in the modern era.217
273Binnie J. commented in Little Salmon:
The historical treaties were typically expressed in lofty terms of high generality and were often ambiguous. The courts were obliged to resort to general principles (such as the honour of the Crown) to fill the gaps and achieve a fair outcome.218
274Second, the trial judge expressed dismay at the positions taken in this litigation by Ontario and Canada,219 implicitly echoing McLachlin C.J.’s comment in Taku River that “[t]he Province’s submissions present an impoverished vision of the honour of the Crown and all that it implies.”220 The trial judge noted that “both Ontario and Canada reject the proposition that they have duties of disclosure or consultation in the implementation process.”221 This hard position, she said, “flies in the face” of Supreme Court authority on the honour of the Crown, leading her to note that: “The duty of honour must find its application in concrete practices and in legally enforceable duties.”222 Those duties include both a duty to consult and a duty to disclose at least “sufficient information to allow the parties to calculate net Crown resource revenues.”223
275Third, these observations about the recalcitrance of both Ontario and Canada224 led the trial judge to doubt the prospect of successful negotiations:
However, when negotiation fails to achieve a resolution or if the Crown refuses to negotiate, the Treaties’ beneficiaries are entitled to ask for judicial intervention. And if the Treaties’ beneficiaries issue a claim after 168 years of no action on the part of the Crown, the court cannot simply accept the Crown’s acknowledgment of their duty of honour and permit the Crown to carry on without further direction.225
276The trial judge went on to craft the judgments under appeal with no confidence that a simple declaration without more judicial direction would trigger good faith negotiations. On the record before her, this was not an unreasonable assessment.
(1) Ontario’s Arguments
277Ontario makes three arguments on remedies. First, the trial judge erred in excluding the costs of infrastructure and institutions from the calculation of net Crown resource-based revenues. Second, her “fair share” formulation is not supported on the evidence. Third, as framed, the remedy in the judgments is not justiciable. We found earlier that the justiciability argument has no merit. We address the remaining two issues in turn after setting out the relevant language of the judgments. We conclude with some observations on Stage Three in light of the matters addressed in this section of the reasons.
(2) The Language of the Judgments
278The context for all three issues is set by the terms of the formal judgments from the Stage One proceedings. For convenience, in our analysis, we will use the text of the judgment from the Huron action, which is materially the same as the text of the judgment from the Superior action. Our analysis applies equally to both judgments.
279The trial judge found that the Treaties require the payment of a “fair share” of net Crown resource-based revenues to the First Nations. Paragraph 1(a) of the operative part of the judgment from the Huron action provides:
Pursuant to the Robinson Huron Treaty of 1850, the Crown is obligated to increase, and the First Nation Treaty Parties have a collective treaty right to have increased, from time to time, the promised annuity payment of £600 (or $2,400) if net Crown resource-based revenues from the Treaty territory permit the Crown to do so without incurring loss, with the amount of annuity payable in any period to correspond to a fair share of such net revenues for that period[.] [Emphasis added.]
280The trial judge added, at para. 1(d) of the judgment: “The Crown must diligently implement the augmentation promise, so as to achieve the Treaty purpose of reflecting in the annuities a fair share of the value of the resources, including the land and water in the territory” (emphasis added).
281The trial judge included guidance on the definition of “net Crown resource-based revenues” in paras. 3(b) and (c) of the judgment:
(b) For the purpose of determining the amount of net Crown resource-based revenues in a particular period:
i. relevant revenues to be considered are Crown resource-based revenues arising directly or in a closely related way to the use, sale, or licensing of land (which could include the waters) in the Treaty territory, including mineral and lumbering revenues and other analogous revenues as received by the Crown both historically and in the future, but not including personal, corporate or property tax revenues,
ii. relevant expenses to be considered are Crown expenses related to collecting, regulating, and supporting relevant revenues, but do not include the costs of infrastructure and institutions that are built with Crown tax revenues,
with these definitions to be applied as general principles that are subject to clarification and further direction by the Court in a future stage of this proceeding; and
(c) Failing agreement amongst the parties, the principles to be applied for purposes of determining amounts that are fairly and reasonably equal to a fair share of net Crown resource-based revenues are subject to further direction by the Court in a future stage of this proceeding.
(3) The Definition of Net Crown Resource-Based Revenues
282Ontario argues that the trial judge erred in excluding the costs of infrastructure and institutions built with Crown tax revenues from the calculation of net Crown resource-based revenues. To be fair to the trial judge, she embarked on this exercise at the behest of the Huron and Superior Plaintiffs226 and against the opposition of Ontario and Canada, who urged her to “proceed cautiously”, arguing that the questions of what constitutes a revenue and an expense were better dealt with in Stage Three.227 The trial judge’s ambivalence about deciding the issue is signalled by her comment that: “I agree, to some extent, with both positions.”228 However, the trial judge accepted the Huron and Superior Plaintiffs’ argument that there was sufficient evidence before the court to “articulate general principles”.229
283The trial judge accepted the arguments of Ontario and Canada that tax revenues should not be considered in calculating net Crown resource-based revenues230 and on that basis excluded the costs of “the infrastructure and institutions that are built with Crown tax revenues.”231 But her uncertainty is revealed in this statement:
With respect to further principles guiding the definition of relevant revenues and expenses, I suggest that more or better evidence at Stage Three of this litigation may be of further assistance. The above general principles should be considered as a starting point only.232
284The trial judge encouraged the parties to “come to an agreement on specific revenue and expense categories”.233 The same hedging for uncertainty is found in paras. 3(b) and (c) of the judgment quoted earlier.
285Ontario argues that the hedging language “appears to leave open the possibility that some tax revenues may be relevant, creating the potential for inconsistency.” Ontario appears to fear a form of tracing as the basis for establishing relevant revenues and expenses and notes that the ruling “failed to take into account uncontested evidence that by far the majority of provincial revenues and expenses flow through Ontario’s consolidated revenue fund.” Ontario expects that “there likely will be no ‘infrastructure and institutions’ that have been built exclusively with tax revenues” (emphasis in the original), and argues that if “applied categorically, this ‘general principle’ may exclude expenses that should be included, at least in part.”
286The trial judge’s desire to give some guidance was well-intentioned, but, in our view, the counsel of caution should have prevailed. A prescriptive paragraph in a judgment should not be framed as only a first foray into a complex and difficult issue already scheduled to be heard. We would, as an exercise of prudence, excise the words, “but not including personal, corporate or property tax revenues,” from para. 3(b)(i) of the judgments, and the words, “but do not include the costs of infrastructure and institutions that are built with Crown tax revenues” from para. 3(b)(ii) of the judgments.
(4) The “Fair Share” Formulation
287Ontario argues that the trial judge erred in interpreting the Treaties as promising the payment of annuities corresponding to a “fair share” without defining “fair share” or articulating related principles. Ontario acknowledges that “[a]ll parties to the Robinson Treaties likely intended the annuities agreed upon to be ‘fair’ in context”, but argues that the concept of “fair share” was not discussed or agreed upon in Treaty negotiations and that there is no basis to infer any common intention that the promise be for a “fair share”.
288The judgments provide that the Treaties require the payment of annuities corresponding to a “fair share of the value of the resources, including the land and water in the territory”. We would deconstruct the judgments into two possible promises for analytical purposes. The first is that the augmentation clause was a promise to share in the value of the land. The second is that a “fair share” was promised.
289The first form of promise – to share in the value of the land - is supported on the evidence and was woven through the trial judge’s interpretation of the augmentation clause. The same cannot be said for the second form of the promise – the elusive promise of fair share. We address each in turn.
(a) The Promise to Share
290At the most obvious level, the concept of sharing was built into the augmentation clause. Any future increase in the annuities will be funded out of net Crown revenues – revenues from the ceded lands in excess of costs. In that simple sense, the revenues would literally be shared.
291But the concept of sharing is more fundamental. It was integral to the interpretation of the augmentation clause that the trial judge adopted, to quote it again for convenience:
A third interpretation, which includes the second interpretation, is that the Treaties were a collective promise to share the revenues from the territory with the collective; in other words, to increase the lump sum annuity so long as the economic condition was met.234
292The trial judge found that “[a] plan to share the wealth on an ‘if and when’ basis through an augmentation clause was always central to the understanding, the aspiration, and the intent of both the Anishinaabe and the Crown.”235
293From the Anishinaabe perspective, the principles that the trial judge found “fundamental to the Anishinaabe’s understanding of relationships”,236 particularly the principle of reciprocity, suggest that the Treaties would have been viewed as an agreement to share in the value of the territory. But the word “value” is notoriously vague, as a review of the evidence shows.
294In her careful recounting of the evidence on this issue, the trial judge described the Anishinaabe’s “established tradition of sharing their territory with others, provided that the use or occupation was authorized.”237 She described the “ubiquitous” practice of gift giving among the Anishinaabe, which was considered “an act of moral imperative, rather than an economic necessity.”238 Within Anishinaabe society, “hunters shared their bounty knowing that in turn, another hunter would reciprocate and share his when needed.”239 Gift giving occurred “in accordance with the principle of reciprocity, which holds that items of value are given with the expectation that the gift will be returned.”240
295The practice of gift giving became part of alliances between Euro-Canadians and the Anishinaabe:
Prospective allies demonstrated their ability to take care of each other through the mutual exchange of gifts. Reciprocal gift giving was representative of the alliance that included the possibility of shared spaces and resources, embodying the principle of mutual interdependence. An alliance included the mutual promise of responsibility for each other.241
296Sharing was inherent in the Anishinaabe practice of gift giving and in the principle of reciprocity. The trial judge found that, upon ceding their land to the Crown, “[t]he Anishinaabe Chiefs and leaders had every reason to expect that their ‘gift’ attracted a reciprocal ‘gift’, commensurate with the value of what they had provided.”242
297The trial judge also grounded her finding that the augmentation clause promised some form of sharing in specific expressions by Anishinaabe leaders, such as the specific request for a “share” in a petition from Chief Shingwaukonse to Governor General Lord Cathcart, dated June 10, 1846. The trial judge found that this petition, in which Chief Shingwaukonse protested mining activities, “proposes to share the benefits derived from the territory.”243 Chief Shingwaukonse wrote:
I see Men with large hammers coming to break open my treasures to make themselves rich & I want to stay and watch them and get my share. Great Father – The Indians elsewhere get annuity for lands sold if ours are not fit in most places for cultivation they contain what is perhaps more valuable & I should desire for sake of my people to derive benefit from them… I should much wish to Great Father to see you & take your hand and ask you to tell me of these things, and also open to you my mind for tho’ I can write yet I could speak it better to you… I want always to live and plant at Garden River and as my people are poor to derive a share of what is found on my Lands. [Emphasis added.]
298The trial judge found that Chief Shingwaukonse “eloquently argued for a share of the wealth for over four years” and did not abandon this idea during treaty negotiations.244 On another occasion, Chief Shingwaukonse expressed the desire for “pay for every pound of mineral that has been taken off of our lands, as well as for that which may hereafter be carried away.”245 The trial judge also quoted Chief Peau de Chat’s words: “A great deal of our mineral has been taken away. I must have something for it. I reflect upon it, as well as upon that which still remains.”246
299These “demands from the Anishinaabe for a share of the proceeds of [the mining] activity” were a significant part of the context that the trial judge took into account in interpreting the augmentation clause.247 She found that the concept of sharing could be traced from the Chiefs’ expressions and petitions to the recommendation in the Vidal-Anderson Report that provision be made, “if necessary, for an increase of payment upon further discovery and development of any new sources of wealth.”248
300The word “value” is used in different ways in the evidence and by the trial judge in her reasons. The trial judge described Anderson’s visit in 1848. She stated: “Chief Peau de Chat also sought information on the value of the mineral wealth. He stated that he wanted a fair evaluation of his land’s worth and arrears for the loss of minerals”.249 This suggests a monetary conception of value. That conception is also invoked in the Vidal-Anderson Commissioners’ belief “that the Lake Superior Anishinaabe had been led ‘to form extravagant notions of the value of their lands’”.250 Both this conception of value, and the fact that it was not familiar to the Anishinaabe, were also suggested by Chief Shingwaukonse’s comments to the Commissioners, regarding his lawyer: “[W]e have appointed Macdonell to arrange our affairs… I know nothing of the value of the land, - we thought of our ignorance and employed Macdonell.”251
301It is clear that a monetary conception of “value” was being employed and that the “value” in question related to revenue produced from activities in the territory (both revenue from mining locations and proceeds from sale of lots).252
302The trial judge asked: “What did the Commissioners Mean by ‘Value of the Land’?” This question arose from the fact that “no prior treaty linked compensation to value.”253 The trial judge pointed out that there was “no market for any Indian land” after the Royal Proclamationof 1763; only the Crown could buy such land. The trial judge stated: “Consequently, the Government controlled, or arbitrarily set, the entire market for Anishinaabe land ‘sales’. There was no way for Anishinaabe leaders to know ‘the value’ of the land, if value was measured as a function of future revenue.”254
303The trial judge stated:
The Commissioners’ repeated statements on this issue of “ignorance of value” leads to three possible inferences concerning the Commissioners’ assumptions: first, that “value”, however it was defined, was going to be an important factor to consider to reach a mutually acceptable agreement on annuity amount; second, that the Anishinaabe would be in a compromised position without knowledge of the value of the land or the wealth that the territory could produce; and third, that the Commissioners believed the Crown was in a superior position to predict the “value of the land” and that this superior position in negotiating imposed certain duties on the Crown.255
304The trial judge accepted that it was the monetary concept that the Anishinaabe sought to have included and that the Commissioners proposed inserting into the Treaties:
The Commissioners proposed a compensation model that took into consideration “the actual value” of the territory. In a recommendation that reverberates today, the Commissioners made a novel proposal for the new treaty to make “terms in accordance with present information of its resources” while adding a provision for an increase to the annuities “upon further discovery and development of any new sources of wealth” (emphasis added). This recommendation was based on the knowledge the Commissioners acquired during their extensive consultations with the Anishinaabe, as well as their understanding of the challenges facing the Colonial Government at the time.256
305She added: “Since at least 1846, Chief Shingwaukonse spoke of tying the mineral wealth or monies collected in connection to the mining activity to compensation.”257
306From this evidence, the trial judge concluded that the Treaties created a revenue sharing model:
For the Crown, the idea of sharing revenues was novel, but reflected their goal to obtain access to the land and resources, limit their liability, and deal honourably with the Anishinaabe.
A treaty that linked the future revenue of the territory to the annuities payable to the Anishinaabe answered the uncertainties and risks present. A revenue sharing model was consistent with the perspective that the Anishinaabe Chiefs held about their relationships with the newcomers and the land. It was also consistent with the Anishinaabe’s duties of responsibility as leaders toward their people. In addition, the sharing model invited renewal as circumstances changed. Most importantly, a sharing model was consistent with the principle of reciprocity.258
307This analysis and the trial judge’s finding that the Treaties created a revenue sharing model are well supported and were not effectively challenged by Ontario. The trial judge did not err in characterizing the Treaties in this way.
(b) The Concept of “Fair Share”
308We turn now to the second promise identified by the trial judge as part of her interpretation of the augmentation clause, the promise of a “fair share”. The judgments set out what the trial judge considered to be the consequences of her interpretation of the augmentation clause, which is constructed around the concept of a fair share.
309To recapitulate, para. 1(a) of the operative language of the formal judgments provides that: “the amount of annuity payable in any period [will] correspond to a fair share of such net revenues for that period” (emphasis added). Paragraph 1(d) of the judgments add that the Treaty purpose is to reflect in the annuities “a fair share of the value of the resources, including the land and water in the territory” (emphasis added). Paragraph 1(e) addresses the graciousness clause and obliges the Crown to consult with the Treaty parties “to determine what portion, if any, of the increased annuity amount is to be distributed by the Crown to the individual Treaty rights holders in addition to the $4 per person per year they are already being paid”. Finally, para. 3(c) leaves things somewhat more open: “the principles to be applied for purposes of determining amounts that are fairly and reasonably equal to a fair share of net Crown resource-based revenues are subject to further direction by the Court in the future stage of this proceeding” (emphasis added).
310In terms of the trial judge’s reasons for decision, the expression “fair share” first emerged in her summary of the position of the Huron Plaintiffs, who argued for “renewing the treaty relationship and moving to a fair sharing agreement of the land and its resources.”259 The trial judge next referred to the “fair share of the net revenues” as an implementation issue in dispute.260 In argument, both the Huron Plaintiffs and the Superior Plaintiffs suggested that a fair share would be 100 percent of net Crown revenues.261 The trial judge rejected this proposition stating, “[s]haring, by definition, does not include taking 100% of the net benefits from the Crown.”262 She addressed and rejected the Huron Plaintiffs’ and Superior Plaintiffs’ claims to all of the revenues.263 Finally, the trial judge noted that it was not yet possible to specify what a fair share would be:
It is not possible to articulate the principles for a fair share in a vacuum. There was very little evidence before the court on post-Treaty economic activity in the territories. In a later stage of these proceedings it will be up to the parties to demonstrate what division of revenues is supportable on the evidence.264
(c) Ontario’s Position
311As noted, Ontario argues that the trial judge erred in interpreting the Treaties as promising the payment of annuities corresponding to a “fair share” without defining “fair share” or articulating related principles.
(d) Analysis
312We agree with Ontario that the trial judge’s interpretation of the Treaties fell short on the “fair share” issue. As we will explain, the trial judge’s interpretation of the Treaties as giving the Anishinaabe a “fair share” of the value of the territory went beyond a generous construction of the Treaties.
(i) The “Fair Share” Error
313The expression “fair share” is not an actual interpretation of the augmentation clause. The “promise to share the revenues from the territory” gains nothing substantive from the addition of the words, “fair share”. The concept of a “fair share” is neither drawn from the evidence nor is it especially useful in understanding the Crown’s obligations under the Treaties. The expression is a rhetorical gloss that adds nothing substantive but has the potential to work mischief.
314The trial judge’s interpretation of the Treaty promises has two elements. The first is that “the Treaties were a collective promise to share the revenues from the territory with the collective; in other words, to increase the lump sum annuity so long as the economic condition was met.”265 The second relates to the graciousness clause and obliges the Crown to consult with the Treaty parties to determine how much of any increase was to be paid directly to the individual Treaty rights holders.266
315We recognize that at one level, no one can quarrel with the idea of a “fair share”. We instill the virtue of sharing in our children. As the trial judge noted, sharing is what the Treaties are built on. No reasonable person would oppose an arrangement that was “fair”. Ontario acknowledges that “[a]ll parties to the Robinson Treaties likely intended the annuities agreed upon to be ‘fair’ in context.” So, on this reading, “fair share” seems quite innocent. But that would downplay the effectiveness of a rhetorical figure of speech. It was introduced by the Huron and Superior Plaintiffs’ counsel for that reason.267
316The trial judge’s judgment that the Treaties promise a “fair share” of net Crown revenues is not supported by evidence. This phrase does not appear in any of the historical records. It seems to have originated with counsel. The Huron Plaintiffs, in their Amended Statement of Claim, seek “[j]udgment … that the Crown is to forthwith provide payment of a fair share of the net profit, said share to be the subject of a negotiated agreement between the Crown and the Plaintiffs.”268 They state:
The Robinson Huron Treaty Territory has been considerably taken-up since the signing of the Treaty in 1850. The Robinson Huron Treaty Anishinabek were not meaningfully consulted by the Crown with regard to the taking-up of those lands. Nor were they accommodated, as provided in the Treaty, by way of being paid a fair share of resource revenues as promised by Robinson in 1850.269
317The expression “fair share” was repeated many times by counsel for both the Huron and Superior Plaintiffs, in oral and written submissions. The “fair share” concept was advanced as part of Robinson’s understanding of the augmentation clause (“Mr. Robinson himself must have believed that the augmentation clause was capable of providing the Anishinaabe with a fair share of the proceeds of the land”);270 as the desire of Chief Shingwaukonse (“He wants his fair share”)271 and other Anishinaabe leaders (“[W]e have the Fort William Chief and principal man concerned that they want their fair share”);272 as the core purpose of the augmentation clause (“[W]e say that that is an approach that’s entirely consistent with the purpose of the augmentation clause, which is to provide the Anishinaabe with a fair share of the revenues”);273 and – in its absence – as the basis of later complaints (“They’re complaining they’re not getting their fair share”).274
318At one point, the trial judge asked counsel about the origin of the phrase, “fair share”. At first, counsel agreed that this phrase originated in the Vidal-Anderson report. Counsel then corrected himself and said, instead, that it came from Chief Shingwaukonse’s 1846 petition, stating, “He says, I want my fair share.”275 But this too was an error by counsel. There is no evidence on the record that Chief Shingwaukonse ever used the phrase “fair share”. He said that he wanted to “get my share”, and that he desired “as my people are poor to derive a share of what is found on my Lands.”276
(ii) The Impact of Adopting “Fair Share”
319Introducing the concept of “fair share” into the judgments is not without consequences. It might seem obvious that the share owed to the Anishinaabe ought to be a fair one. However, as can be seen from the trial judge’s attempt to determine what constitutes a fair share, the concept tends to focus the mind on the amount or percentage of revenue that ought to be redirected to the Treaty First Nations, rather than on the state of affairs that this promise to share sought to, and ought to, achieve. The Anishinaabe were not focused on subsistence in the Treaty negotiations but on sharing the wealth.277 They sought the ability to live as they had so long as possible but also sought to benefit from the rise in living standards that would accompany development, especially if that development impaired their traditional way of life. They were not aiming at mere subsistence.
(iii) What Kind of Sharing is Required by the Treaty Promise?
320The trial judge’s task in Stage Three is to determine what kind of sharing the augmentation clause requires and what increase is necessary in the annuities to fulfil the Treaty promise.
321In describing the Anishinaabe principle of responsibility, the trial judge stated:
The Anishinaabe Chiefs and leaders came to the Treaty Council with a responsibility to ensure that their people could enjoy continued dependence on the land for their sustenance, their medicines, and their spiritual well-being, and, equally, that they could continue to be responsible for that land.278
322Based on the trial judge’s reasoning, the common intention of the parties was to share in such a way that would provide for both communities. This would suggest that the “share” promised is to be determined not only based on the extent of Crown revenues but also with reference to the relative wealth and needs of the different communities. Obviously, the Anishinaabe would not have expected their communities to suffer a range of deprivations, including substandard housing and boil water advisories, while non-Indigenous communities thrived. Nor was it likely, based on the Anishinaabe principles discussed by the trial judge, that the Anishinaabe would have wished to enjoy great personal wealth while their fellow Canadians suffered deprivation.
323The trial judge noted:
[T]he court and the parties must return to the shared goals, expectations, and understandings of the parties in 1850 and, based on those shared goals, expectations, and understandings, devise processes and procedures for the implementation of the Treaties’ promise in the modern era.279
The parties in negotiations, or the trial judge in Stage Three, must determine the form, level, and aim of the sharing that the augmentation clause requires. The parties and the court should be led, in doing so, by the Treaty parties’ “shared goals, expectations, and understandings” in 1850, including the Anishinaabe principles of respect, responsibility, reciprocity, and renewal, identified by the trial judge, and the Crown’s commitment to being both liberal and just.
324The remaining task of interpretation, and the basis of implementation, lies in determining what the sharing relationship envisioned by the Anishinaabe and the Crown in 1850 would look like today and how that relationship can be brought about. This is the task of reconciliation.
325The trial judge observed that “questions regarding implementation remain subject to dispute”.280 The precise form of sharing required by the Robinson Treaties remains to be determined. Because of our concerns about the possible misuse of the concept of “fair share” as a figure of speech, we would amend the formal judgment to delete it, as set out in Appendix “A”.
(5) Observations on Stage Three
326We make two observations. First, the staging of this case has introduced some uncertainties into the process. There is a functional trifurcation but the stages have become somewhat confused. Broadly conceived, Stage One was dedicated to the interpretation of the Treaties, the identification of the Treaty promises, and the determination of the duties of the Crown, while Stage Two related to the Crown’s defences, and Stage Three to the Huron and Superior Plaintiffs’ remedies. However, as matters progressed, some elements of interpretation seem to have been reserved for Stage Three. The trial judge also seems to have reserved a decision on whether the Crown breached the Treaties for Stage Three.281 In some ways, Stage Three has become a basket for unresolved issues carried forward from Stages One and Two.
327The second observation is that the implementation of the Treaty promises in Stage Three presents unusual complexities that will be difficult to manage. It would be far better for the parties to negotiate, rather than litigate, the remaining issues.
328Negotiations also allow the court to step back from “[c]lose judicial management” that “may undermine the meaningful dialogue and long-term relationship that these treaties are designed to foster.”282 Although written about a modern treaty, these words would apply equally to a negotiated agreement on how the promises in the Robinson Treaties are to be implemented.
329The careful language of modern treaties, having been negotiated by competent, sophisticated and adequately resourced parties, has the advantage of creating precision, continuity, transparency and predictability,283 and is due judicial deference.284 In our view, this would also be true of negotiated agreements for the implementation of historical treaties.
330Neither the trial judge nor this court has any information as to whether and to what extent the parties have engaged in negotiations.285 But there appear to have been three barriers to successful negotiations. The first is the position taken by Ontario and Canada before the trial judge that the Crown has unfettered discretion as to whether, when, how, and in what amount the annuities might be increased. This court’s decision clarifies the Crown’s obligations. There is something to negotiate about.
331The second barrier to negotiation was the trial judge’s insertion of the concept of “fair share” into the interpretation of the augmentation clause, which we addressed earlier. This court’s decision eliminates this barrier.
332The final barrier is the ongoing struggle between Ontario and Canada over which government will pay the annuities and, if both are obliged to contribute, in what proportion. The panel requested that the parties consider having the trial judge hear and determine the allocation issues on an expedited basis, before the Stage Three hearing. Ontario and Canada were opposed to doing so. In the absence of their consent, this court has no jurisdiction under the Rules of Civil Procedure to require that the allocation issue be dealt with separately and in priority.286
333We urge both Crown parties to reconsider their stance on expediting the allocation issue in order to facilitate the negotiation of an agreement on the implementation of the Robinson Treaties. In our view, the best way to accomplish the task of reconciliation is through negotiation. Compared to continued litigation, with its attendant close judicial management, a modern agreement on the implementation of the Robinson Treaties, negotiated by the Treaty parties, is more likely to produce a strong, renewed Treaty relationship.287 True reconciliation will not be achieved in the courtroom.288
F. Issue Five: Did the Trial Judge Err in Her Costs Award for the Stage One Proceedings?
334Ontario also appeals from the costs awards in favour of the Superior and Huron Plaintiffs for the Stage One proceedings. The trial judge awarded costs and disbursements to the Superior Plaintiffs of $5,148,894.45 and $9,412,447.50 to the Huron Plaintiffs, with Ontario and Canada each to pay one half of those amounts.
335Canada does not appeal from the costs awards.
336Ontario argues that the trial judge erred in awarding 85 percent of actual legal fees after concluding that partial indemnity costs were appropriate. Ontario submits that partial indemnity costs cannot exceed 67 percent of fees paid. It submits that the trial judge erred in principle by giving no weight or insufficient weight to Ontario’s reasonable expectations in awarding disproportionately high costs to the Superior and Huron Plaintiffs, and argues that she erred by failing to scrutinize the costs they claimed in a substantive and meaningful way.
337For the Superior Plaintiffs, Ontario asks that the costs be fixed at the rate of 67 percent of the fees found by the trial judge to be recoverable, that the manner in which the trial judge dealt with costs awarded for an earlier motion be varied, and that these plaintiffs recover their disbursements as awarded by the trial judge. The Superior Plaintiffs claimed $5,151,448.21 in fees. The difference between an award of 85 and 67 percent of claimed fees is $927,267.88, of which $463,630.34 would be paid by Ontario. Inclusive of disbursements, Ontario says the total award ought to be $4,166,381.06.
338For the Huron Plaintiffs, Ontario submits that the hours claimed are excessive, asks that they be reduced by 50 percent, and requests that costs be fixed at 67 percent of that amount plus the disbursements allowed by the trial judge. The Huron Plaintiffs claimed $8,383,930.00 in fees. The difference between an award of 85 percent of claimed fees and 67 percent of the proposed reduced-hours fees is $4,317,723.95, of which $2,158,861.98 would be paid by Ontario. Inclusive of disbursements, Ontario says the total award ought to be $5,094,724.55.
(1) The Trial Decision on Costs
339The trial judge found that the Huron Plaintiffs and the Superior Plaintiffs were entitled to costs on a partial indemnity basis fixed at 85 percent of their fees and 100 percent of their disbursements.289
340Before the trial judge, Ontario and Canada agreed that it was appropriate to award the Huron Plaintiffs and the Superior Plaintiffs their costs for Stage One and the summary trial, including pleadings and case management. Ontario and Canada also agreed that they each should be liable for half of the costs award. They disagreed, however, with the Huron Plaintiffs and the Superior Plaintiffs on the quantum of costs, in addition to other issues that are not pursued on appeal.
341The trial judge first found that the Huron Plaintiffs and the Superior Plaintiffs were entitled to costs at a higher-than-typical rate of 85 percent based on the factors set out in r. 57.01 of the Rules of Civil Procedure, including:
Amount Claimed – The amount claimed in the litigation is substantial;290
Complexity of the Proceedings – The litigation is on the high end of complexity (i.e., the interpretation of two historic Treaties will re-shape the Crown-Indigenous relationship for a vast area of northern Ontario), the procedural history of the litigation is complex and evolving, and certain legal and strategic decisions by Ontario and Canada prolonged or complicated the proceedings;291
Importance of the Issues – The issues raised in the case are of central importance to the entire Anishinabek Nation and central to the broad national public interest in reconciliation with Indigenous peoples of the upper Great Lakes Territories;292
Principle of Indemnity – All parties retained teams of highly specialized and experienced counsel and should be fairly compensated for the increased costs associated with specialized and experienced counsel;293 and
Context of Indigenous Legal Issues – The fiduciary relationship forms an important consideration for the award of costs in this matter and, in these circumstances, the small, remote and historically economically marginalized First Nations plaintiffs should not have to assume 40 percent of the costs in this litigation.294
(2) Analysis
342Stage One of these proceedings was of the utmost importance to the Treaty partners. The trial of this part continued over 78 days. The parties filed twenty expert reports and nineteen witnesses gave oral evidence. The trial time was the tip of the iceberg in comparison to the years of preparation.
343Leave to appeal costs is not granted lightly. As this court observed in Barresi:
The test for leave to appeal costs is high: there must be “strong grounds upon which the appellate court could find that the judge erred in exercising his [or her] discretion”: McNaughton Automotive Limited v. Co-Operators General Insurance Company (2008), 2008 ONCA 597, 95 O.R. (3d) 365 (C.A.), at para. 24, citing Brad-Jay Investments Ltd. v. Szijjarto, 218 O.A.C. 315 (2006) (C.A.), at para. 21. A costs award should be set aside on appeal “only if the trial judge has made an error in principle or if the costs award is plainly wrong”: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.295
344Costs awards are “quintessentially discretionary.”296 They are accorded a very high degree of deference.297
345In Frazer, this court observed:
A trial judge has extremely broad discretion in the awarding of costs, which is entitled to a very high degree of deference and [is] not to be taken lightly by reviewing courts. A reviewing court can only review a trial judge’s award of costs where he or she has considered irrelevant factors, failed to consider relevant factors or reached an unreasonable conclusion. And finally, a reviewing court will not interfere with a trial judge’s disposition on costs on the grounds that the members of the appellate court would have exercised their discretion differently: Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3 at para. 39.298
346As this court noted in Bondy-Rafael:
[P]artial indemnity fees are not defined in terms of an exact percentage of full indemnity fees under the Rules of Civil Procedure. While representing a portion of full indemnity costs, that portion has never been defined with mathematical precision but generally amounts to a figure in the range of more than 50 percent but less than 100 percent. This is as it should be given the myriad factors that the court must consider in the exercise of its discretion in fixing costs.299
347Similarly, this court has repeatedly noted that the extent of the reduction associated with partial indemnity costs is a matter within the trial judge’s discretion.300 As observed in Wasserman, Arsenault Ltd.:
The degree of indemnification intended by an award of partial indemnity has never been precisely defined. Indeed, a mechanical application of the same percentage discount in every case where costs are awarded on a partial indemnity scale would not be appropriate. In fixing costs, courts must exercise their discretion, with due consideration of the factors set out in rule 57.01(1), in order to achieve a just result in each case.301
348The trial judge did not err in principle by taking into account the burden it would place on the Huron and Superior Plaintiffs were they to recover only two thirds of their legal fees. This is in the context of admitted neglect by the Crown of its Treaty promises for many decades, and the extreme difficulty of bringing proceedings like these for recognition of Treaty rights by people who have been marginalized by that neglect.
349In Okanagan Indian Band, the Supreme Court noted with approval the Court of Appeal for British Columbia’s reasoning that “constitutional principles and the unique nature of the relationship between the Crown and aboriginal peoples were background factors that should inform the exercise of the court’s discretion to order costs.”302
350Nor can it be said that the trial judge erred in the manner in which she treated the costs paid by Canada on an earlier motion, for which Ontario now seeks some credit. Ontario’s materials do not permit this court to independently calculate what amount any credit should be. If Ontario’s submissions are correct, the Superior Plaintiffs say that Ontario would be entitled to a further credit of $31,845.40. However, this court is unable to conclude that there was an error in principle or that the trial judge was clearly wrong in the manner in which she dealt with the costs paid by Canada. She did deduct the former costs paid from the costs awarded.
351Leave to appeal from the costs award in favour of the Superior Plaintiffs is refused.
352Ontario argued at trial that the hours claimed by the Huron Plaintiffs were excessive. Ontario’s cost outline noted 11,956 hours of legal work for both actions.303 The Superior Plaintiffs started their action in 2001 and proceeded through discovery. Their costs summary claimed 7,644 hours of legal work. The Huron Plaintiffs started their action in 2014, relied in part on the discovery in the other action, and yet claimed for 28,211 hours of legal work which the trial judge allowed in full.
353The trial judge dealt with the controversy regarding the hours spent briefly:
Canada accepts the reported hours, hourly rates and disbursements as reasonable, subject to an assurance that the fees and disbursements claimed for Stage One do not include any time or expenses either already advanced. This assurance was provided.
Ontario challenges the number of hours, size of the team and travel disbursements of the Huron claim based upon comparison to their own hours and costs. I am satisfied the Huron claim survives these challenges.304
354Given the position on appeal, the hourly rates and the travel disbursements are no longer in issue, but Ontario says the hours claimed and the size of the Huron Plaintiffs’ legal team – including 22 lawyers – was excessive.
355The trial judge did not address the substantial difference between the hours claimed as between the Huron and the Superior Plaintiffs. The material before her did not permit her to come to a conclusion as to the amount of time reasonably required by the Huron Plaintiffs to deal with all aspects of the action. Was there over-lawyering or unnecessary duplication of legal work? There may be logical explanations for the substantially greater amount of legal time claimed or there may not. For example, the Huron Plaintiffs claimed more than 6,000 hours of law clerk, paralegal and student work. In contrast, Ontario’s archival research was performed by an independent contractor, Public History, whose time was reflected in a disbursement rather than billable hours. It may also be that the Superior Plaintiffs were able to rely on some of the work done by the Huron Plaintiffs.
356After coming to a conclusion as to the time reasonably spent on this matter the trial judge would then be required to “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable.”305
357As noted in Murano, this overall sense of what is reasonable “cannot be a properly informed one before the parts are critically examined.”306
358Leave to appeal from the costs award in favour of the Huron Plaintiffs is granted. The disbursements allowed by the trial judge are upheld. The fees allowed are set aside and remitted to the trial judge for reconsideration in light of these reasons. This assessment will have to proceed with caution, given that these proceedings are continuing, and privileged matters must be protected from disclosure.
359It will be up to the trial judge to devise a procedure to deal with the manner in which evidence as to the reasonableness of the time spent is presented to her.
G. Disposition
360For these reasons, as summarized in the seven propositions set out above,307 we would grant the Stage One appeals in part, direct that the Stage One judgments be amended as set out in Appendix “A” to these reasons, and remit the matter of the Huron Plaintiffs’ costs for the Stage One proceedings to the trial judge for reconsideration in accordance with these reasons. We would dismiss the Stage Two appeal. We would award costs of the appeals in the manner set out in the joint reasons.
“P. Lauwers J.A.”
“G. Pardu J.A.”
A. Introduction
361We concur with the reasons of Lauwers and Pardu JJ.A. on the issues of costs and indexing. We also agree with the reasons of Hourigan J.A. on the issues of fiduciary duty, Crown immunity and limitation defences.
362We issue these reasons to explain: (1) why the standard of review set out in Marshall applies when reviewing the trial judge’s interpretation of the Robinson Treaties;308 (2) why, applying that standard, we conclude the trial judge committed reversible error in her interpretation of the Robinson Treaties; (3) how the honour of the Crown informs the Crown’s obligation to implement the Treaties; and (4) the appropriate remedy is in this case.
363To set the stage for our analysis, we begin by reviewing the trial judge’s interpretation of the Treaties, the principles governing treaty interpretation, and the standard of appellate review in treaty interpretation cases. We then explain how the trial judge erred in her interpretation of the Treaties, including by failing to consider both the plain meaning of the Treaties’ texts and the only interpretation of the Treaties that reconciled the parties’ intention in a manner consistent with the historical record. We then explain why, notwithstanding these errors, we agree with the trial judge and the majority of this court that, after 150 years of inaction, the Crown can be compelled to exercise its discretion about whether to increase the annuities to address an injustice that brings dishonour to the Crown. Finally, we outline the judgment we would grant in light of our conclusions.
B. The Trial Judge’s Interpretation of the Treaties
364At paras. 70-80 of this court’s joint reasons, we summarized the trial judge’s interpretation of the Treaties. Briefly stated, the trial judge interpreted the Treaties as imposing a “mandatory and reviewable obligation” on the Crown “to increase the Treaties’ annuities when the economic circumstances warrant.”309
