Authors
Partner, Regulatory, Indigenous and Environmental, Toronto
Associate, Disputes, Vancouver
Associate, Disputes, Toronto
Associate, Disputes, Toronto
Articling Student, Toronto
On December 9, 2024, in Chippewas of Saugeen First Nation v. South Bruce Peninsula (Town), 2024 ONCA 884, the Ontario Court of Appeal (Court of Appeal) upheld a decision finding that the reserve of the Chippewas of Saugeen First Nation (Saugeen) had been improperly surveyed in 1855, and that a part of Sauble Beach currently held by private landowners formed part of its reserve.
The Court of Appeal’s landmark decision is the first time that a court has found that an Aboriginal interest in land overrides a fee simple title held by private landowners.
Background
In 1854, representatives of the Imperial Crown negotiated Treaty 72 with Saugeen.[1] The treaty created a reserve extending 9.5 miles north of the Saugeen River to a “spot upon the coast” of Lake Huron. When the Crown’s surveyor, Charles Rankin, arrived at Lake Huron in 1855 to fix the boundaries of the Saugeen reserve, he found that the shoreline unexpectedly curved inwards. This meant that a line drawn to the “spot upon the coast” would have entered the water. However, according to the surveying principles of the time, Rankin was required to draw boundary lines over dry land and so Rankin moved the northern boundary post approximately 1.4 miles south of the “spot upon the coast”.
As a result, Rankin’s survey removed 1.4 miles of beachfront on Lake Huron from the Saugeen reservation. Between 1857 and 1907, this land (the disputed beach) was patented by the Imperial and federal Crowns and sold to private purchasers. Today, this section of Sauble Beach is owned by cottagers, the Sauble Beach Development Corporation, and the Town of South Bruce Peninsula (the town).
Saugeen sued Canada, Ontario, the Town, and the private landowners. It claimed that the disputed beach formed part of their reserve lands. The trial judge, Vella J., divided the action into two phases. Phase I was heard between November 2021 and May 2022. Phase II, which will resolve any outstanding matters, will be heard once all appeals on the Phase I issues are exhausted.
The phase I decision
Justice Vella’s ruling on the Phase I issues was released in April 2023. The first issue was whether the boundaries of the Saugeen reservation had been correctly set in 1855. Considering the historical record, Vella J. held that Rankin had improperly set the boundaries of the reservation, which ought to have included the disputed beach.
The second issue was who held title to the disputed beach, and whether Saugeen’s claims to the land were barred by any defence. Justice Vella held that title to the disputed beach should return to the Saugeen reserve, and that no defences barred Saugeen’s claims. In separate reasons, Vella J. rejected the individual landowners’ arguments that they should be given life estates entitling them to own the disputed beach until their deaths, holding that this would “not advance reconciliation in the circumstances of this case”.
Finally, Vella J. held that any pre-Confederation liability for the Imperial Crown’s dishonourable conduct, including the improper survey, should fall on Canada and not Ontario.
The Town, the private landowners, Canada, and Ontario appealed the Phase I decision.
The Court of Appeal decision
The Court of Appeal unanimously dismissed the appeals of the Town, the private landowners, and Ontario. It held that the trial judge correctly interpreted Treaty 72 and correctly reverted title to the disputed beach to Saugeen. However, the Court of Appeal allowed Canada’s appeal, finding that Vella J. had improperly predetermined the liability of the federal Crown.
Issue 1: the boundaries of the Saugeen Reservation
First, the Court of Appeal upheld Vella J.’s interpretation of Treaty 72 and her factual findings that Rankin had improperly surveyed the Saugeen reservation in 1855.
“In interpreting a treaty,” the Court of Appeal wrote, “the court’s task is to identify possible interpretations of the common intention of the parties at the time the treaty was made, and to choose from among those possible interpretations the one that best reconciles the interests of the First Nations and the Crown”. Treaties also must be interpreted “generously and liberally”, with ambiguous language read in favour of the Aboriginal party.
Justice Vella determined that the common intention of Saugeen and the Crown when negotiating Treaty 72 was to reserve the entire beachfront up to the “spot upon the coast” to Saugeen. In particular, she noted the spiritual importance of Lake Huron and traditional practices such as fishing to the Saugeen people. She held that Saugeen had bargained for the entire coastline and when interpreting Treaty 72, Rankin violated the intentions of the parties and the honour of the Crown by moving the northern boundary post 1.4 miles south of the “spot upon the coast”. Had Rankin fulfilled the honour of the Crown, Vella J. held that the Disputed Beach should have formed part of the Saugeen reservation.
The Court of Appeal found that Vella J. had not erred in applying the legal principles of treaty interpretation. Noting that factual findings are given deference on appeal, the Court of Appeal upheld Vella J.’s conclusions on the intentions of the parties and that the Disputed Beach should have been included in the Saugeen reservation in 1855.
Issue 2: ownership of the disputed beach
Second, the Court of Appeal upheld Vella J.’s order that title to the Disputed Beach should revert to Saugeen.
Under traditional principles of equity, the claim of a “bona fide purchaser for value without notice” to property is superior to all other claimants. For example, an innocent person who unknowingly buys a stolen car generally has a superior claim to the car than its original owner. The Town and the private landowners, successors in interest to the people who bought the land from the Crown between 1857 and 1907, argued that this defence applied and that equity barred Saugeen’s claim.
In 2000, the Court of Appeal wrote in Chippewas of Sarnia Band v. Canada (Attorney General) that it had to be determined “on a case-by-case basis” whether “a rigid application of the good faith purchaser for value defence would constitute an unwarranted denial” of Aboriginal title.
Here, Vella J. had already concluded that the disputed beach should have been part of the Saugeen reservation and was subject to Aboriginal title. Therefore, she had to consider the bona fide purchaser defence. She held that the bona fide purchaser defence did not apply to landowners who inherited their property, because they had not paid for it. For the landowners who did buy their property, Vella J. held that the bona fide purchaser defence was subject to the court’s discretion, and balanced the competing interests of Saugeen and the existing landowners. She noted that the disputed beach, although crossing through cottage properties, did not include any homes and was used only used for recreation and tourist parking. On the other hand, Saugeen had an important cultural and spiritual connection to the land and water, as well as a “constitutionally protected Treaty right to exclusive possession of its reserve territory”. Therefore, Vella J. determined that equity favoured Saugeen’s interest over the interests of the private owners.
The Court of Appeal found that Vella J. was wrong in holding that landowners who inherited property could not avail themselves of the defence because it would lead to the perverse result of encouraging claimants to wait for a bona fide purchaser to pass away before commencing their claim against beneficiaries of an estate. The Court of Appeal held that “[w]hat passes to any heirs is the same as what the good faith purchaser held: the property stripped of pre-existing encumbrances”. However, the Court of Appeal found that it was open to the trial judge, who balanced all of the competing interests, to find that a rigid application of the bona fide purchaser doctrine would render an injustice in the circumstances of this case.
The Court of Appeal recognized that there were no cases where the bona fide purchaser defence had not succeeded, because a bona fide purchaser’s interest “almost always” carries the stronger equity. However, the Court of Appeal held that this is not always the case when Indigenous interests in land are in play, especially when the land at issue was set aside as a reserve, because of the sui generis nature of a First Nation’s interest in reserve land. As such, when an Indigenous land interest is competing against later acquired legal rights, the Court of Appeal held a court must weigh the equities and consider the conscionability of upholding the legal rights of the bona fide purchaser in the circumstances.
In the result, the Court of Appeal affirmed Vella J.’s order returning title to the disputed beach to the Saugeen reservation and discretion in declining to apply the bona fide purchaser defence against Saugeen’s Aboriginal title claim.
Issue 3: liability of the Federal and Provincial Crowns
Finally, the Court of Appeal held that the liability of Canada and Ontario should be determined at Phase II of the trial.
The Saugeen reservation was surveyed prior to Confederation by agents of the Imperial Crown. Therefore, it was a live issue which of the modern governments of Canada or Ontario would be liable for the Imperial Crown’s mistakes. In 2021, Vella J. had ordered that the liability of Canada and Ontario be reserved to Phase II of the trial. However, in her Phase I judgment, she wrote that the liability “falls to the federal Crown, Canada” under the Constitution Act, 1867.
The Court of Appeal held that Vella J. had violated procedural fairness by predetermining the federal Crown’s liability without allowing Canada or Ontario to make submissions. The Court of Appeal vacated this aspect of the trial judge’s decision and left the issue of Canada’s liability to be determined in the Phase II trial.
Takeaways
The Court of Appeal’s decision is a significant development of the bona fide defence. As the Court of Appeal wrote, citing the 1872 English case Pilcher v. Rawlins, under the traditional rules of property law, “[t]he plea of purchaser for valuable consideration without notice is an absolute, unqualified, unanswerable defence”. For this reason, prior to Vella J.’s ruling, the defence succeeded in every case where it was raised. However, the Court of Appeal held that because of the sui generis nature of a First Nation’s interest in reserve land, the bona fide purchaser’s interest will not necessarily carry the stronger equity, and a court must weigh the equities and consider the conscionability of upholding the legal rights of the bona fide purchaser in the circumstances.
The Court of Appeal’s ruling therefore opens the door to Aboriginal title claims against private landowners, even where those landowners acquired their property in good faith and without knowledge of the Aboriginal interest. However, the Aboriginal interest will not always succeed, depending on “the equities” of the case — what is fair in the circumstances. Factors to be considered include the current use of the land, whether the owners live on it, whether the Aboriginal group acquiesced to private ownership, and the importance of the land to the Aboriginal group, including its spiritual and cultural significance.
The town has indicated that it will file an application for leave to appeal the Court of Appeal’s decision to the Supreme Court of Canada. If the Court denies leave, the disputed beach will become part of the Saugeen reservation and a Phase II trial will then commence to determine whether Saugeen, the town, and the private landowners have a remedy, such as compensatory damages, against Ontario or Canada. We will continue to keep you informed as this case progresses through the courts.
[1] At that time, what is now southern Ontario was part of the Province of Canada, a British colony. Upon Confederation in 1867, the federal Dominion of Canada was created, and the Province of Canada was divided into the modern provinces of Ontario and Québec.
