SOUTHWIND v. CANADA - Supreme Court Case

Overview

On July 16, 2021, the Supreme Court of Canada released its decision in Lac Seul First Nation’s flooding claim against Canada – Southwind v. Canada.  The full decision is available at: https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/18955/index.do?q=southwind.

This case addresses how Lac Seul First Nation should be compensated for the illegal flooding of its reserve lands.  The Court ruled that Canada’s fiduciary duty required it to obtain the highest possible compensation for the flooded reserve lands.  That means the value of the flooded land must be assessed as part of the hydroelectric project, not valued simply as vacant bushland.

Facts & Lower Court Decisions

In 1929, over 11,000 acres of Lac Seul First Nation were flooded for a power dam constructed by Canada, Ontario, and Manitoba.  The flooding was done without the First Nation’s consent and without compensation.  Fourteen years later, the First Nation did receive a little compensation, but again without the First Nation’s consent, knowledge, or consultation.  The reserve lands will continue to be flooded for the foreseeable future.

In 2017, the First Nation obtained a judgment in Federal Court against Canada for breach of fiduciary duty and was awarded $30 million.  In that decision, the trial judge ruled that Canada would likely have expropriated the reserve land in 1929.  The Court assessed damages based on an expropriation model which valued the flooded land as bushland and held this was the minimum legal duty Canada had to meet to obtain the reserve land.

In 2019, the Federal Court of Appeal agreed with the trial judge and affirmed the $30 million compensation amount based on the trial judge’s “expropriation compensation model”.

Supreme Court of Canada Decision

The Supreme Court rejected the trial judge’s approach.  The Court ruled that the question was not what Canada would likely have done in 1929, but what Canada ought to have done to fulfill its fiduciary duty to the First Nation.  The Court agreed that Canada could expropriate the reserve land in 1929, but it found that did not define Canada’s fiduciary duty.  Canada’s fiduciary duty was to negotiate compensation to reflect the land’s best value – while considering the importance of the land to the First Nation and the impact of the project.

The Supreme Court ruled that the Canada’s obligation was to get the highest possible compensation for the First Nation.  But the trial judge did not assess the First Nation’s lost opportunity to negotiate compensation that reflects the land’s value to the hydroelectric project.  So, the Supreme Court ordered that the Federal Court’s award for equitable compensation must be set aside and returned the case to the Federal Court for reassessment, guided by the principles from the Supreme Court.

These principles now apply to all First Nation claims for the illegal taking of reserve lands in Canada.

Next Steps

Lac Seul is now in a strong position to obtain fair compensation for the flooding of its reserve lands.  Chief and Council will work with the First Nation’s lawyers and advisors to secure that compensation, following the principles set down in the Southwind decision.

There are two options going forward.  The preferred option is to negotiate a resolution with Canada.  If an agreement-in-principle can be reached with the federal government on a compensation amount, the final approval will be up to the membership of Lac Seul First Nation.  A vote will be taken, and a settlement agreement signed – but only if the Lac Seul First Nation membership approves it.

The second option is to go back to Federal Court and have a short trial to reassess the compensation.  This would mean that the ultimate decision will be in the hands of a judge – again – rather than in the hands of Canada and the First Nation membership.

The First Nation will likely pursue both options at the same time so that if the negotiations with Canada are not fruitful, the reassessment by the Federal Court can proceed.  Chief and Council is determined to see a final resolution and obtain fair compensation as soon as possible.

Acknowledgements

Chief and Council would like to acknowledge the efforts and perseverance of our Elders and Chiefs to get to this important milestone in our claim, including: Chief Raymond Ningewance who pushed both the federal and provincial governments in the 1970s to acknowledge the devastation caused by the flooding, Chief Roger Southwind who filed the original court claim in 1991, Chiefs Roger Bull, Roy Carpenter, Tom Peetwayway, Leroy Quoquat and David Gordon, and former Chief Maud who all negotiated forcefully with Canada on behalf of Lac Seul First Nation, and all of our past and current leadership who tenaciously pursued Canada through a long trial and two appeals in Court to get to this result.  This is not just an important victory for Lac Seul First Nation; it is important for all First Nations in the Treaty 3 territory and across Canada.