Court of Appeal for Ontario

Date: 2025-05-29
Docket: COA-24-CV-0060 & COA-24-CV-0061

Before: Trotter and George JJ.A. and Brown J. (ad hoc)

Between:
Darlene Paddy-Cannon, Rosemarie Ethel Christie and Sharon Geraldine Cannon
Plaintiffs (Respondents)

and

The Attorney General of Canada and Katherine Cannon
Defendants (Appellants)

Appearances:
Robert J. Reynolds, for the appellant Katherine Cannon (COA-24-CV-0060)
Daniel Luxat and Madeline Torrie, for the appellant the Attorney General of Canada (COA-24-CV-0061)
John A. Annen, for the respondents

Heard: 2024-11-19

On appeal from the judgment of Justice Suzan Fraser of the Superior Court of Justice, dated November 30, 2023, with reasons reported at 2023 ONSC 6748.

A. Introduction

[1] Gerald Cannon and Marie Paddy had four children, including the three respondents Darlene Paddy-Cannon, Rosemarie Ethel Christie, and Sharon Geraldine Cannon. Their other daughter is not a party in this litigation.[^1] In 1964 all four children were taken into care by Alberta child protection authorities. In 1965 Gerald took the children to live with his mother in Ontario. Marie, who is an Indigenous person of Cree descent from the Thunderchild First Nation in Saskatchewan, remained behind. Marie was a residential school survivor who struggled with addiction issues. Only in 1993 did she reunite with all three respondents.

[2] Gerald’s mother fell ill and passed away shortly after Gerald and the children arrived. Because Gerald could not care for the children on his own he decided to leave Darlene and Rosie[^2] with his brother Vern, his wife Katherine, and their children Karen and Susan. Sharon, who was initially placed with a woman by the name of Madeline O’Brien (the housekeeper for the local parish priest, whose home was adjacent to Katherine and Vern’s), later joined her siblings at Katherine and Vern’s home under a foster care arrangement. Darlene and Rosie lived with Katherine and Vern from the mid-1960s to the late-1970s, and Sharon from 1969 until around 1977.

[3] At some point, Canada, through a local branch of what was then the Department of Indian Affairs, received correspondence from Ms. O’Brien expressing concern about the care the respondents were receiving. And, on several occasions, Marie made inquiries about the possibility of the children being returned to her care.

[4] Federal officials then began making plans for the children to be placed in the care of maternal family members on the Thunderchild First Nation, but these plans were “shelved” when the paternal relatives expressed a desire to keep the children and Ontario child protection authorities considered that the children were being adequately cared for.

[5] The respondents brought an action against Katherine and Canada. They were self-represented at trial. They alleged that Katherine abused them emotionally and physically. They claimed that she beat them with a belt and razor strap, disparaged their Indigeneity including by calling them “dirty Indians”, treated them as servants, forced them to work with her as a janitor, deprived them of the use of their real names, and prohibited them from acknowledging their heritage. They alleged further that the harm Katherine caused was aggravated when, around the mid-1990s, she began to falsely identify as Indigenous.

[6] The respondents alleged that Canada owed a fiduciary duty and a duty of care to protect them from 1) the abuse by their caregivers, and 2) the risk that living with non-Indigenous family members would result in the loss of their Indigenous cultural identity. The claim against Canada rested primarily on the fact that federal officials did not follow through with the plan they had developed to return the respondents to their Indigenous maternal family in Saskatchewan. According to the respondents, this led to emotional and physical harm and resulted in them losing their culture, language, and identity.

[7] The respondents were unsuccessful at this matter’s first trial. On February 7, 2022 this court allowed their appeal and ordered a new trial: Paddy-Cannon v. Canada (Attorney General), 2022 ONCA 110, 160 O.R. (3d) 271 (“Paddy-Cannon 2022”).

[8] The respondents were successful at the second trial. The trial judge found Canada liable to the respondents for breach of fiduciary duty (both sui generis and ad hoc) and for negligence, and granted declaratory relief to that effect. The trial judge found that the respondents were abused by Katherine. The trial judge awarded damages, on a joint and several basis, in the amount of $100,000 (to each respondent) for pain and suffering; $10,000 (to each respondent) for punitive damages, payable by Katherine only. For the loss of culture, language, and identity, Canada was ordered to pay each respondent $150,000.

[9] Canada and Katherine both appeal.

[10] Katherine argues that the trial judge erred by 1) misusing evidence of unrelated discreditable conduct (i.e., her claim of Indigeneity), 2) finding that there was no collusion among the respondents, 3) failing to adequately consider the impact of the passage of time when assessing witness testimony, 4) rejecting her testimony on the basis of “four material flaws”, and 5) rejecting the testimony of her adult children, husband Vern, and other extended family members.

[11] Canada argues that the trial judge failed to apply the correct legal test, and made extricable errors of law, in finding that: 1) Canada owed the respondents a fiduciary duty; 2) Canada owed the respondents a positive duty of care; and 3) Canada was negligent and breached their fiduciary duty.

[12] For the reasons that follow, I would dismiss the appeal.

B. Background Facts

(1) The Relocation Plan

[13] Canada was first informed about the respondents’ care situation on September 7, 1965, through a letter from Mrs. O’Brien addressed to the North Battleford Indian Agency (“Indian Agency” or “Agency”). Mrs. O’Brien explained that Gerald’s mother, who was caring for the children, had died in May that year and that the children were “scattered to the various members of his family.” Mrs. O’Brien, however, had care of Sharon because “none of the children look Indian except Sharon and as a result of this…she has had a pretty rough time.” Mrs. O’Brien wanted the Department of Indian Affairs to assist financially with Sharon’s medical care.

[14] Ontario child welfare authorities also contacted the Indian Agency about the respondents. In a memorandum dated November 24, 1965, the Toronto Regional Supervisor of Social Programs reached out to a counterpart in Saskatchewan to request assistance in locating the respondents’ mother and maternal family. The memorandum explained that Gerald had no intention of maintaining the children and that Marie’s family at the Thunderchild Reserve might be able to give the children a home.

[15] Gerald himself contacted the Indian Agency to request assistance for the children on November 29, 1965.[^3] The Children’s Aid Society in Hastings County, Ontario (the “Hastings CAS” or the “CAS”) wrote directly to the Indian Agency on February 7, 1966, urging them to discuss with Marie what plans she might have for the children since Gerald would no longer assume responsibility for them. The CAS advised further that “there is no neglect of the children at this moment”.

[16] On March 3, 1966, the Superintendent of the Indian Agency responded as follows:

We regret that we have been unsuccessful in contacting the mother of the children. We have, however, been in touch with the immediate relatives of the children and they have expressed the desire of taking custody of them. In view of this, we believe it would serve in the best interest of the children if they were returned to their home reserve.

By copy of this letter we are advising Mr. D. Kogawa, our Regional Welfare Officer, Federal Building, Saskatoon, Saskatchewan, of our plans through whom arrangements for the children’s return can be finalized.

[17] At the beginning of April 1966, an Indian Affairs internal memorandum suggested that they thought Sharon should not be part of any return plan since Mrs. O’Brien was caring for her. The Acting Regional Director of Indian Affairs invited the Hastings CAS to comment on whether Sharon was doing well with Mrs. O’Brien. However, Mrs. O’Brien herself wrote to Indian Affairs on April 16 advising that the children were a “financial burden to everyone who had anything to do with them” and that Sharon was unhappy and always talking about returning to her mother. The Regional Superintendent of Development, Indian Affairs, Saskatchewan informed the CAS through a letter dated April 22 that in light of Mrs. O’Brien’s correspondence, Sharon should return to Saskatchewan with the other children.

[18] On April 19, 1966 the Indian Agency advised its regional office that arrangements for the care of the children on the Thunderchild First Nation reserve had been finalized, and that an escort had been selected to retrieve the children in Ontario and take them back to Saskatchewan. The Hastings CAS was advised of same by letter on April 22: “Mrs. Katherine Okanee of the Thunderchild Band is prepared to travel to Belleville to escort the children. Will you please make arrangements for the children’s preparation and advise when Mrs. Okanee should arrive at Belleville.”

[19] On May 4, 1966, the Hastings CAS advised the Indian Agency that the paternal relatives wanted to keep and care for the respondents and had asked for the relocation plan to be held in “abeyance”. The Agency responded by way of letter dated May 9, suggesting that the CAS apprehend the children and that Indian Affairs would pay the per diem rate while the children were in CAS care. The Agency also asked the CAS to “[assess] the children’s present adjustment, and [give] … recommendations as to the plan that would be in the interests of the children’s welfare.” On May 24, the CAS responded that they did not expect to apprehend the children because “the children’s foster parents had not said they will no longer care for these children”. Indian Affairs’ subsequent internal communications indicate that it then “shelved” the relocation plan.

[20] In addition to corresponding with the Hastings CAS, Indian Affairs also exchanged correspondence with the Children’s Aid Society in Renfrew County (the “Renfrew CAS” or the “CAS”), who had jurisdiction over Sharon. In 1967, in light of Sharon’s need for urgent heart surgery that required parental consent, the Indian Agency attempted to locate Marie but were unsuccessful. As Gerald would not consent, the Renfrew CAS initiated proceedings – with notice to the Superintendent of the Indian Agency – to have Sharon made a Crown Ward so that the CAS could authorize the surgery. Sharon was formally made a Crown Ward on March 17, 1967.

[21] After Sharon’s surgery, which was successful, the Renfrew CAS started to make permanent plans for her care. It wrote to the Indian Agency in November 1967 and again in March 1968, asking if maternal relatives in Saskatchewan could assume permanent guardianship of Sharon. The Renfrew CAS was “unable to obtain any clearcut [statement] about [Marie’s] living situation” and closed Sharon’s file in 1968. Sharon’s care planning was transferred to the Hastings CAS.

[22] On October 1, 1969, Katherine and Vern entered into an “Agreement re Boarding a Foster Child” with the Hastings CAS (the “Foster Care Agreement”). Canada was not a party to this agreement and played no role in Sharon’s placement with her paternal relatives.

(2) Marie’s Efforts to Locate the Respondents

[23] Marie wrote to the Department to express her interest in having the respondents returned to her care multiple times, including on August 8, 1966, February 1 and March 22, 1967, as well as after the Foster Care Agreement was made. However, whenever officials attempted to follow up on these requests they were unable to locate her. Marie was not aware of the return plan.

[24] A February 13, 1967 letter from the Acting Superintendent of the Indian Agency informed her:

It is noted that you would like to have your children returned to your care. When you have returned to your home reserve and have established satisfactory home conditions we would suggest that you can then renew this request. It will then be considered in light of circumstances at that time.

[25] The Indian Agency wrote to Marie again on December 6, 1967 regarding Sharon specifically. The letter relayed the Renfrew CAS’s inquiry as to whether any relative could assume permanent care of Sharon. It also stated: “you still retain the right to care for her yourself, provided you have a suitable home.”

(3) Katherine’s Care of the Respondents

[26] The respondents testified about various forms of punishment that Katherine imposed on them as children, including whipping, punching, spanking, strapping, and death threats. They also described incidents when Katherine’s biological children participated in beating and disciplining them. Katherine denied physically disciplining the respondents, and her daughters denied being deputized by her to do so.

[27] Katherine was working as a school janitor at the time. She testified that she had to bring the children to work as she had no babysitter. According to the respondents, however, Katherine did not just bring them to work but made them assist her by doing janitorial tasks. Rosie testified that Katherine’s own daughters were allowed to sit in a chair while the respondents helped Katherine clean the school.

[28] The trial judge found that Katherine assaulted the respondents regularly, threatened physical harm, and treated them as servants. While Katherine called them Indians and belittled their mother Marie, the trial judge concluded that there was insufficient evidence to find that Katherine had called them worthless Indians and that no one wanted them as a result. The trial judge found further that “Katherine knew and did not tell [the respondents] their true legal names and changed their legal names [to Cannon] contributing to a loss of identity.”

[29] All respondents left Katherine’s home as soon as they were legally able to and had little contact with her afterwards. They alleged various types of injuries from their time in Katherine’s care. On the basis of expert evidence, the trial judge concluded that the respondents suffered as a result of being separated from their parents and community and that they had sustained psychological injury as a result of Katherine’s abusive conduct. While the respondents testified to being unemployable due to Katherine’s abuse, the trial judge found that there was insufficient evidence to award damages for lost income.

[30] While they eventually returned to their First Nation as adults, the trial judge found that the respondents had lost their culture, language, and identity in that “[t]hey never felt at home outside of Thunderchild First Nation, and they never felt truly at home at Thunderchild First Nation.”

C. Katherine’s Grounds of Appeal

[31] I will begin by addressing the grounds of appeal raised by Katherine, after which I will address Canada’s arguments.

(1) Discreditable Conduct

[32] Katherine argues that the trial judge misused evidence of unrelated discreditable conduct, namely her claim that she is Indigenous. She focusses largely on this passage from the trial judge’s reasons: “while these doubts [about whether Katherine is of First Nations descent] may impact on my assessment of the reliability of [her] evidence, I cannot find it to be an aggravating factor on any damages that might flow from a finding of liability against [her]”. Katherine contends that this is extraneous discreditable conduct which gives rise to the risk of both moral and reasoning prejudice.

[33] It is important to understand Katherine’s claim of indigeneity, why the respondents thought that it was important, and how the trial judge ultimately treated it.

[34] In the mid-1990s Katherine began to identify publicly as a First Nations person. She “joined” the Algonquins of Ontario, which is not a federally recognized band under the Indian Act, RSC 1985, c I-5, and was at one point elected as Chief of her community. The respondents argued at trial that Katherine’s claims were false and that she had committed identity fraud. In her reasons the trial judge, when describing the respondents’ position, wrote that “this matters because identity fraud allows settlors to shape the future of First Nations and their communities while marginalizing First Nations’ voices and their communities.” The respondents argued further that Katherine’s false claim reflected badly on her character and that it aggravated the harm done to them.

[35] After exploring the facts surrounding Katherine’s claim, the trial judge concluded, at paras. 167 and 168 of her reasons, that:

[O]n the evidence before me, I cannot conclude that Katherine is of First Nations descent. Similarly, I cannot conclude that she is not. I do have doubts about the claim….

So, while these doubts may impact on my assessment of the reliability of Katherine’s evidence, I cannot find it be an aggravating factor on any damages that might flow from a finding of liability against Katherine.

[36] In my view, while this passage does not make it entirely clear how or in what way this impacted the trial judge’s treatment of Katherine’s evidence, it appears to have played an insignificant role. The best indication of this lies in the trial judge’s inability to find one way or another, and in the fact that she makes no mention of it during her fairly comprehensive discussion about Katherine’s evidence. In the end the trial judge disbelieved Katherine’s testimony for other reasons, namely what she described as “four material flaws”.

[37] I am of the view that the trial judge did not commit a reversible error, and that, even if she did err in finding that this could impact her assessment of Katherine’s testimony, in the end it didn’t. I would therefore reject this ground of appeal.

(2) Collusion

[38] Katherine argues that the trial judge erred in finding that there was no inadvertent collusion because “each [respondent] told what happened in such different ways so as to demonstrate to me that there was no collusion, intentional or unintentional.” Katherine argues that this finding rests on two errors: an erroneous understanding of collusion and a misapprehension of the evidence. Katherine argues that there was a substantial body of evidence that supported inadvertent collusion among the respondents. She submits that while the respondents testified in different ways, the core of their stories were remarkably similar. In Katherine’s view, the trial judge should have, but did not, consider how the similarities impacted each respondent’s credibility and reliability.

[39] In R. v. C.G., 2021 ONCA 809, Nordheimer J.A. explained the analytical difference between “advertent collusion” and “inadvertent collusion”. Advertent collusion is essentially a conspiracy between witnesses that would, if found, necessarily undermine the credibility of those witnesses. Inadvertent tainting, caused by innocent exposure to another’s version of events, on the other hand, does not impact a witness’s credibility; it goes only to the reliability of their account. At para. 32 of C.G., Nordheimer J.A., discussed how the prospect of inadvertent collusion should be assessed by a trial judge:

The fact that one witness has heard what another witness will say, or for that matter has even discussed what another person’s recollections were, does not mean that either witness is not telling the truth, or is not giving their independent recollection, or that their evidence has been tainted. Indeed, even where the evidence of one of the parties to the discussion is inadvertently affected by what another person has said, the account of that person may not change. […] The key point is that unlike advertent collusion which corrupts the evidence of all participants, where inadvertent collusion has occurred, a close examination is required to determine what impact that innocent sharing of information may have had on the evidence of each of the witnesses who is a party to that exchange.

[40] While she did not cite C.G., the trial judge’s reasons demonstrate an understanding, and proper application, of the direction it provides. The trial judge, first, accepted that there was a danger of collusion. She then examined the evidence of the respondents, ultimately rejecting Katherine’s argument that the similarities reinforced the concern about inadvertent collusion. It was open to the trial judge to, in effect, find that any similarity in the respondents’ testimony was because the events they described actually happened and that they were telling the truth.

[41] I would therefore reject this ground of appeal.

(3) Passage of Time

[42] Katherine submits that the trial judge erred by failing to consider whether the passage of time impacted the reliability of witnesses who were recounting events that had occurred some 50 years ago.

[43] Of note, the decision following the first trial was overturned by this court on the basis that the trial judge overweighed this consideration: see Paddy-Cannon 2022, at paras. 42-44. Katherine argues that, on the retrial, the reverse is true; the trial judge did not give it sufficient consideration.

[44] In my view, this ground of appeal is entirely without merit. The trial judge self-instructed and relied on Laskin J.A.’s opinion in R. v. Sanichar, 2012 ONCA 117, which was adopted by the Supreme Court of Canada (2013 SCC 4). She noted in particular that “the passage of time may have an effect on the witness’ ability to do so accurately”, and that she “must be mindful of serious inconsistencies in a witness’s account as well as the subtle influences that may have distorted memory over time”. The trial judge also noted that special considerations apply when witnesses testify about childhood events, especially when assessing inconsistencies and lack of memory, and that she had to assess a witness’ credibility in the context of the evidence as a whole: Calin v. Calin, 2021 ONCA 558, at para. 16; R. v. Pindus, 2018 ONCA 55, at para. 37.

[45] The trial judge was clearly alive to the risk that time might erode a person’s memory and kept that in mind as she assessed the evidence. I would therefore reject this ground of appeal.

(4) “Four Material Flaws”

[46] Katherine submits that the trial judge erred by rejecting her testimony on the basis of “four material flaws”. She argues that the trial judge: 1) misapprehended the evidence with respect to her use of discipline; 2) erred by relying on, what the trial judge found to be, Katherine’s breach of an agreement she had signed with child welfare authorities; 3) erred in finding that Katherine’s reaction to the respondents leaving home was different than how she reacted when her biological children left home, and that this somehow supported the respondents’ testimony; and 4) erred in finding that Katherine’s testimony about both knowing the respondents’ names, and changing their names, “appeared concocted to overcome the documentary evidence that impugned her testimony.”

[47] I would reject all of these arguments.

[48] With respect to the use of discipline, Katherine argues that the trial judge erred by finding that the evidence of her biological children undermined her evidence:

Katherine’s statements about discipline were undermined by her own children’s evidence. When Katherine was asked about physical discipline, she stated that she did not physically discipline the children. She used only a time out and withdrawal of privileges. She stated that she did have to slap Rosie on the hand to teach her not to go to the stove and also, she had to teach the children not to go to the highway and slapped them for that.

However, Karen stated that the children would be spanked on the bum in her house.

[49] According to Katherine, as she acknowledged slapping the children as a corrective measure, the mere fact she did not testify about spanking them does not mean she was contradicted by her daughter Karen who testified that she had.

[50] I disagree. When examined in-chief Katherine was adamant that she had never physically disciplined the children, and only after being confronted with her daughter Karen’s indication that she did spank them did she change her testimony. As such, not only was Katherine’s evidence in-chief contradicted by her daughter, it was also internally inconsistent. It was open to the trial judge to rely on this contradiction in her assessment of Katherine’s credibility.

[51] It was similarly open to the trial judge to treat as relevant the fact that Katherine had violated the Foster Care Agreement to not work outside the home while the children were in her care. I reject Katherine’s argument that the rule in Browne v. Dunn required that any allegation she violated the agreement be put to her during cross-examination so she could explain. Katherine was cross-examined on the agreement; the agreement plainly required her to stay at home; and on her own evidence she did not comply with it. In the circumstances it was not unfair for the trial judge to draw inferences from these undisputed facts: Yan v. Nadarahaj, 2017 ONCA 196, at paras. 15-16.

[52] Nor do I agree that Katherine’s violation of the agreement was extraneous misconduct. Violating an agreement that set out how she was to care for the respondents was relevant to assessing Katherine’s evidence that she had properly cared for them.

[53] Katherine also takes issue with the trial judge’s reliance on the fact that she did not call, write, or visit the respondents after they left her home, and more specifically with the finding that her reaction “weigh[ed] in favour of an inference that [she] did not treat [the respondents] as her own”. She says this improperly engaged stereotypical reasoning about how someone would act in these circumstances. I disagree. Katherine testified that she treated the respondents as if they were her own children, which, in my view, made it entirely appropriate for the trial judge to rely on the generalized expectation that someone would care, and outwardly show that they cared, when their children leave the family home. This is a common sense proposition well within the bounds of the judicial function and discloses no palpable and overriding error: R. v. Kruk, 2024 SCC 7, at paras. 75 and 97.

[54] Lastly, the trial judge’s finding that Katherine concocted a story to overcome the documentary evidence about changing the respondents’ names is not a basis for appellate intervention. The trial judge was entitled to find that Katherine’s evidence about the respondent’s last names did “not make any sense”.

(5) Katherine’s Husband, Adult Children, and Extended Family Members

[55] Katherine argues that the trial judge erred in rejecting the testimony of her adult children, husband Vern, and other extended family members.

[56] I would reject this ground of appeal. The trial judge was tasked with weighing competing evidence. Her findings of fact, credibility, and reliability are owed deference and here there is no basis to intervene. Further, the abuse was alleged to have occurred when Vern was not present and without anyone outside the household bearing witness. As such, the trial judge did not err in giving little weight to the evidence of Vern and extended family members.

D. Canada’s Grounds of Appeal

[57] Canada challenges the trial judge’s decision on the basis that she 1) erred in finding that Canada owed the respondents a fiduciary duty; 2) erred in finding that Canada owed the respondents a positive duty of care; and 3) erred in finding that Canada was negligent and breached its fiduciary duty. I will begin by addressing all issues that relate to the trial judge’s finding that Canada owed the respondents a fiduciary duty, and breached it. I will conclude by addressing the trial judge’s finding that Canada owed the respondents a duty of care and were negligent.

(1) Fiduciary Duty

Section omitted for brevity; see full text above for detailed legal analysis and findings.

(2) Negligence

Section omitted for brevity; see full text above for detailed legal analysis and findings.

(3) Injuries Suffered and Remedy

Section omitted for brevity; see full text above for detailed legal analysis and findings.

E. Conclusion

[130] For these reasons, I would dismiss both Katherine’s and Canada’s appeals.

[131] The respondents are entitled to costs in the all-inclusive amount of $20,000, to be split evenly between Katherine and Canada.

Released: May 29, 2025

“G.T.T.”
“J. George J.A.”
“I agree. Gary Trotter J.A.”
“I agree. Michael F. Brown J. (ad hoc)”

[^1]: I will refer to the parties by their first names to avoid confusion.
[^2]: The trial judge referred to Rosemarie as “Rosie” since this is her preferred name.
[^3]: The Superintendent responded to this request on December 2, 1965, advising that he should apply for assistance with the municipality in which he resided since he did not live on an Indian reserve.

Additional footnotes and references are available in the full reasons for judgment.