SUMMARY:

• Lac Seul First Nation has won an appeal to have damages reviewed for historical flooding on its lands and confirming the Crown’s fiduciary duties to Indigenous peoples.
• The Supreme Court of Canada on July 16, 2021 ruled the Government of Canada breached its fiduciary obligation to protect the reserve land at Lac Seul First Nation when the governments of Canada, Manitoba and Ontario decided without consent or consultation with the community to flood the reserve with the construction of a hydroelectric dam in 1929.
• More than 11,000 acres of Lac Seul First Nation were flooded, destroying nearly one-fifth of the reserve lands. Homes and fields were destroyed. Graves were submerged and portions of the reserve were severed from one another.
• In an action initiated by Lac Seul First Nation in 1991, the community claimed damages from the Crown for losses caused to it and its members as a result of the flooding.
• Lac Seul First Nation is now entitled to equitable compensation for the lost opportunity to determine the use of their land at the time the hydroelectricity project was developed.

The Supreme Court of Canada decision in Southwind v. Canada on July 16, 2021 marks an historic victory for Lac Seul First Nation located in Treaty 3 territory in northwestern Ontario and has profound implications for specific claims policy reform.
The ruling comes 30 years after Lac Seul First Nation originally filed a claim in Federal Court when one-fifth of the reserve land was flooded as a result of a hydroelectric dam where Lac Seul drains into the English River. This decision could greatly increase compensation owed to First Nations for specific claims related to reserve lands.

The 8-1 ruling confirmed the Crown’s fiduciary duties to Indigenous Peoples and that a previous award of $30 million was insufficient given the extensive damage and loss of land. The case has been ordered back to the Federal Court to reassess the compensation amount.

In the July 2021 ruling, the Supreme Court determined that:

• The common law principles of expropriation law are not the appropriate framework to determine compensation to a First Nation for breach of fiduciary duty related to reserve land.
• Reserve land is not a commodity and First Nations’ interests in land are fundamentally different from other Canadians. First Nations have a special relationship with the land, which is at the centre of the relationship between the Crown and Indigenous Peoples.
• Equitable compensation seeks to restore a First Nation to the position it would have been in had the Crown not breached its fiduciary duty. Where restoring or returning the First Nation’s land to its original condition is not possible, equitable compensation must be provided.
• The Government of Canada had a duty to make the most favourable use of the property it holds in trust for the First Nation. If the government fails to carry out this duty, the courts must seriously consider whether the total award to the First Nation will be an effective deterrent for the government’s conduct, in addition to compensating lost opportunities.
• The impact of public projects, such as a dam, places a duty on the Government of Canada to capture the full potential value of the land for the land’s intended use.
• Lac Seul First Nation was entitled to compensation based on the best price that could have been obtained for the land’s use, namely generating hydroelectricity.

The AFN intervened in Southwind v Canada to support the position that First Nations that are harmed when the Government of Canada fails to protect reserve land should be compensated for the land’s original value and the full potential value of the land’s use.

AFN’s Specific Claims Policy Reform Work

For decades, First Nations have advocated for the creation of a fully independent specific claims process to facilitate the resolution of claims.
While the Southwind v. Canada decision went through the Federal Courts, the AFN anticipates implications for the specific claims process. There are claims related to unauthorized use of reserve land across Canada, including 18 specific claims and several civil claims relating to flooding of reserve lands in Treaty 3 where Lac Seul First Nation is located.

The Supreme Court Canada Decision on Southwind v. Canada can be accessed on the Supreme Court of Canada website. You can find information on AFN’s Specific Claims Policy reform work online, and provide input on our proposed claims process.

For more information please contact Jesse Donovan, Policy Analyst, Lands Sector, at jdonovan@afn.ca.