Quebec failed ‘honour of the Crown’ obligations in renewal of Indigenous policing agreements: SCC

By Terry Davidson ·

Law360 Canada (November 27, 2024, 4:35 PM EST) -- The Supreme Court has ordered that Quebec pay a local Indigenous group hundreds of thousands for deficits the latter incurred running its community-based police force, finding the province failed to act in good faith and maintain the “honour of the Crown” during contract renewal talks.

The Nov. 27 Supreme Court of Canada ruling in Quebec (Attorney General) v. Pekuakamiulnuatsh Takuhikan, 2024 SCC 39, involved successive trilateral agreements between Canada’s government, Quebec’s government and the Pekuakamiulnuatsh Takuhikan band council, in which the two governments would fund Indigenous-based policing in the community of Mashteuiatsh, in southeast Quebec.

The purpose of the yearly agreements was threefold: to establish the Sécurité publique de Mashteuiatsh (SPM) police force in the community, to set the maximum contribution Canada and Quebec would provide for SPM operations and to entrust management of the police force to the band council.

But between 2013 and 2017, the yearly funding from the two governments proved to be inadequate, resulting in an operating deficit at the end of each fiscal year. In all, the band council suffered a deficit of almost $1.6 million in its running of the SPM.

Given the deficit was not the result of mismanagement or “extraordinary expenses,” the band council brought a legal action against Ottawa and Quebec in efforts to recoup the money lost to deficit. The council’s claim was two-pronged: one, there was a private contractual element grounded in Quebec’s civil code; two, there was a public element anchored by principles of Aboriginal law.

With this, the band council alleged that Canada and Quebec refused to “genuinely” renegotiate the funding aspect of the contract agreements, resulting in a breach of good faith on the private end and a failure to maintain the “honour of the Crown” on the public end.

 A trial judge dismissed the band council’s application, finding that the contract was between the parties and that the honour of the Crown did not apply.

Quebec’s appeal court, however, set aside that judgment and ordered Canada and Quebec to pay $832,724.37 and $767,745.58, respectively, which represented the accumulated deficits.

Ottawa decided to pay up and not appeal the case further. But Quebec turned to the Supreme Court of Canada to continue the fight.  

The question before the court: Do contract obligations between Quebec and the Indigenous group engage the legal principles of good faith and the honour of the Crown?

In the end, the High Court decided 8-1 that they did and, thus, dismissed Quebec’s application.  

Nicholas Kasirer, Supreme Court of Canada

Nicholas Kasirer, Supreme Court of Canada

Writing for the majority, Justice Nicholas Kasirer found that Quebec’s refusal to renegotiate its financial contributions during contract renewal talks with the band council ran contrary to what is considered good faith in such things and that the province had breached an obligation to act in a way that is consistent in honour of the Crown — a public law obligation Quebec had to fulfill as part of the trilateral agreements.

On that latter point, Justice Kasirer found that while the “honour of the Crown” does not apply to every contract case, it does kick in when it comes to those involving the unique relationship between government and Indigenous people.

“The principle of the honour of the Crown, which imposes a high standard of conduct on the State, is one such public law rule that may, in some contexts, broaden the scope of state liability,” writes Justice Kasirer. “Unlike good faith, the honour of the Crown does not apply to the performance of every contract and is not an implied contractual obligation. As a common law rule originating in the sui generis relationship between the Crown and Indigenous peoples, the principle of the honour of the Crown is itself anchored to the goal of reconciliation.”

Kasirer explained that this “applies only in the performance of contracts between the State and Indigenous groups that are intended to foster the modern-day reconciliation of pre-existing Indigenous societies with the Crown’s historic assertion of sovereignty.”

As for the good faith element, Justice Kasirer found that Quebec’s “refusal to renegotiate its financial contribution when the agreements were renewed … was not in keeping with the requirements of good faith.” Quebec’s government, he said, knew the SPM force was underfunded and that a return to having Quebec’s provincial police enforce the law in the community would involve “risks” for those living there.

The ruling means Quebec must pay $767,745.58 — its share of the deficits.

The lone dissenting voice amongst the nine judges was Justice Suzanne Côté, who would have allowed Quebec’s appeal.

Comment from lawyers representing the Pekuakamiulnuatsh Takuhikan band council and the Government of Quebec was not available by press time.

If you have any information, story ideas or news tips for Law360 Canada, please contact Terry Davidson at t.davidson@lexisnexis.ca or 905-415-5899.