Métis Agreement with Crown Corporation Engaged Honour of the Crown

In Manitoba Métis Federation Inc. v Brian Pallister, a unanimous Manitoba Court of Appeal made clear that, even where parties have provided for complex contractual relationships between Crown-owned developers, government and Indigenous groups, the rights exercisable under those contracts and the activities related to those contracts may have constitutional implications – including engaging the honour of the Crown and the duty to consult.

The Contractual Relationship and Consultation

In 2013 and 2014, the Manitoba Métis Federation (MMF) appealed decisions to license two hydropower projects. MMF claimed that the Manitoba Government and the Manitoba Hydro-Electric Board (Hydro) did not adequately consult it in relation to these projects.

In 2014, the parties settled the appeals with an agreement between MMF, Hydro and the Government of Manitoba (the Agreement). The Agreement provided for, among other things, annual payments from Hydro to MMF for 20 years to participate in processes related to the unaddressed impacts from the projects and commitment to maintain “a non-adversarial working relationship.” The Agreement also outlined a dispute resolution process.

When issues arose between MMF and Hydro regarding a new transmission project, MMF and Hydro followed the dispute resolution process and entered into a Memorandum of Understanding (MOU).

The MOU established a confidential, time-limited negotiation process. The MOU was executed on March 1, 2017. On March 9, 2017, the Government of Manitoba introduced new legislation, The Crown Corporations Governance and Accountability Act, governing the relationship between the Province and its Crown corporations, including Hydro.

On June 29, 2017, Hydro and MMF finalized an unsigned term sheet which would resolve the matter (Term Sheet). The Hydro Board later authorized the negotiation and execution of an agreement on substantially the same terms as the Term Sheet. MMF took the position that this was a completed agreement; Manitoba and Hydro disagreed. This disagreement about the effect of the Term Sheet resulted in threats to commence legal action.

On March 21, 2018, the Provincial Cabinet relied on The Crown Corporations Governance and Accountability Act and directed Hydro not to proceed with the Term Sheet “at this time” (the Cabinet Directive). On the same day, nine of 10 Hydro board members resigned.

Following the Cabinet Directive, the parties could not reach an agreement regarding the new disputed project and the Government of Manitoba terminated the initial Agreement. MMF commenced a judicial review and asked the Court to set aside the Cabinet Directive.

Court of Appeal Holds the Agreement Between Manitoba Hydro, the Province and MMF is an Accommodation Agreement

In short, the principle of the honour of the Crown requires Provincial and Federal Governments to deal honourably in their dealings with Indigenous peoples. The Crown’s duty to consult and accommodate the rights of Indigenous peoples before taking actions, such as authorizing a project, that could impact those rights, flows from the honour of the Crown.

MMF argued that the Agreement was an accommodation agreement that arose from the duty to consult and therefore engaged the honour of the Crown. MMF said that, because the Term Sheet arose from the Agreement and the Cabinet Directive potentially affected Métis rights, Manitoba had a duty to consult before issuing the Cabinet Directive.

Manitoba and Hydro argued the Agreement was not a reconciliation or accommodation of any Aboriginal right. They argued that any duties that arose from the Agreement were contractual, not constitutional in nature.

At the Court of Queen’s Bench, Chief Justice Joyal rejected MMF’s arguments and found the honour of the Crown did not apply in the circumstances.

The Manitoba Court of Appeal disagreed. Chief Justice Chartier, writing for the unanimous Court, held the honour of the Crown was engaged by the Agreement and Cabinet Directive for four reasons:

  1. The honour of Crown infuses the entirety of the government’s relationship with Indigenous peoples. Governments cannot “contract out” of the honour of the Crown.
  2. The Agreement was directed at resolving unaddressed claims. The Court said: “[w]hile the [Agreement] was not a modern day treaty, and its terms differed in many respects from the typical accommodation agreement, it was still a very important agreement whose underlying purpose was to establish a process to resolve outstanding claims by the Métis relating to Hydro projects.”
  3. The Agreement was, at least in part, an accommodation agreement. In addition to resolving claims, it established a process to resolve disputes. As well, the Agreement acknowledged the provincial Crown’s general duty to consult and accommodate.
  4. The Cabinet Directive had the potential to affect the accommodation of Métis rights. Had the Term Sheet been executed, the term of the Agreement would have been extended by 10 years.

Therefore, the Agreement and Cabinet Directive engaged the honour of the Crown and the corresponding duties and obligations, including the duty to consult.

The Court of Appeal nevertheless concluded that Manitoba acted honourably in the circumstances. The Court noted that, while it is in the public interest for the Crown to abide by the principle of the honour of the Crown, it does not displace the Crown’s obligations to take into account the “broader public interest.”

The Court of Appeal also rejected the other grounds of appeal. It said Cabinet had the power under The Crown Corporations Governance and Accountability Act to transfer authority from Hydro to the Province to determine whether to enter into certain agreements.

The Court also rejected the procedural rights sought by MMF (advance notice of the Directive, opportunity to respond, etc.) as being incompatible with the confidential Cabinet policy-making function that caused the Cabinet to issue its Directive.

Implications for Parties to Impact Benefit Agreements

Impact benefit agreements between Indigenous communities and project proponents are commonly used to resolve disputes and build consent for developments that adversely affect Aboriginal and Treaty rights.

This case serves as one of the few judicial pronouncements on the role of such agreements and an important reminder of the central role of the special relationship between Indigenous, Provincial and Federal Governments. Obligations to Indigenous Peoples arising from the honour of the Crown may affect the duties of Crown corporations as well as governments who are parties to impact benefits agreements.

This dispute may not be over yet. MMF informed the press that it will be seeking leave to appeal to the Supreme Court of Canada. The MLT Aikins Indigenous practice group will be watching the next steps in this case closely.

If you have questions about how this case may affect you or your organization, we encourage you to reach out to one of the lawyers in our Indigenous practice group.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.