T-4656-75
Delbert Guerin, Joseph Becker, Eddie Campbell,
Mary Charles, Gertrude Guerin and Gail Sparrow
suing on their own behalf and on behalf of all other
members of the Musqueam Indian Band (Plain-
tiffs)
v.
The Queen (Defendant)
Trial Division, Collier J.-Vancouver, September
18, 19, 20, 21, 24, 25, 26, 27, October 1, 2, 3, 4, 9,
10, 11, 12, 15, 16, 17, 18, 19, 22, 23, November 5,
7, 8, 9, 13, 14, 1979, January 31, March 14, 24,
25, 1980, July 3, 1981.
Crown - Indians - Breach of trust responsibility
Surrender of 162 acres of land by Indian Band to the Federal
Crown in trust to lease to such persons and upon such terms
deemed appropriate by the Government of Canada - Band
informed at the surrender meeting of the proposed leasing of
the 162 acres to a golf club - Certain terms of formal lease
ultimately entered into with the golf club different from those
agreed upon at surrender meeting - Whether defendant in
breach of her trust responsibility - Whether defendant is
trustee - Whether defendant had a duty to seek approval of
the Band with respect to the terms of the lease ultimately
entered into - Whether plaintiffs' action is barred by statutes
of limitation or by principle of !aches - Whether defendant
may be granted relief from personal liability - Whether
plaintiffs are entitled to compensatory damages as well as
exemplary damages - Indian Act, R.S.C. 1952, c. 149, ss.
2(1)(a),(h),(o), 18, 37, 38(2), 39(1)(a),(6), 61(1) - Statute of
Limitations, R.S.B.C. 1960, c. 370 - Trustee Act, R.S.B.C.
1960, c. 390, ss. 93, 98 - Laws Declaratory Act, R.S.B.C.
1960, c. 213, s. 2(11) - Limitation Act, R.S.B.C. 1979, c. 236,
s. 6 - Trustee Act, R.S.B.C. 1979, c. 414, s. 98.
By this action, the Musqueam Indian Band seeks a declara
tion that the Federal Crown was in breach of its trust responsi
bility in respect of the leasing, on January 22, 1958, of 162
acres of land on Musqueam Indian Reserve No. 2, in British
Columbia. On October 6, 1957, by a majority vote, the mem
bers of the Band approved a surrender to the Crown of 162
acres of land "... in trust to lease ... to such person or persons,
and upon such terms" deemed appropriate by the Government
of Canada. At the surrender meeting, however, the Band was
told by a representative of the Indian Affairs Branch that the
land would be leased to a golf club for the building of a new
golf course. Such a lease was formally entered into on January
22, 1958. The plaintiffs allege that a number of terms and
conditions of that lease are different from those they were told
about by officials of the Indian Affairs Branch before the
surrender vote and that some of the terms were not disclosed to
them at all. The terms agreed upon at the surrender meeting
were the following: (a) a total term of 75 years; (b) a rental
revenue of $29,000 per year for the first 15-year period; (c)
renewal on a negotiated rental basis every succeeding 10 years,
without any provisions regarding arbitration or the manner in
which the land would be valued; (d) no 15% limitation on any
increase in rent for the second 10-year term; (e) on the
expiration of the lease, all improvements to revert to the
Crown. The essential terms of the lease of January 22, 1958,
are as follows: (a) the annual rent for the four succeeding
15-year periods is to be determined by mutual agreement, or
failing such agreement, by arbitration. The rent is to be cal
culated as if the land were still in an uncleared and unimproved
condition and used as a golf course; (b) the maximum increase
in rent for the second 15-year term is limited to 15%; (c) the
golf club has the right to terminate the lease at the end of any
15-year period by giving six months' prior notice; (d) all
improvements are to revert to the golf club at any time during
the lease and up to six months after termination. The issues are:
(1) Whether the defendant was in all circumstances and at all
the material times, a trustee; (2) if the first question is
answered in the affirmative, whether the terms of the trust set
out in the surrender document permitted the defendant to lease
to anyone on whatever terms it saw fit, without any obligation
to lease to the golf club on the terms discussed at the surrender
meeting and without any duty to seek approval of the Band in
respect of the terms of the lease ultimately entered into; (3) if
there was a breach of trust, whether plaintiffs' action is statute-
barred or barred by the equitable principle of laches. This
action was commenced on December 22, 1975. The defendant
alleges the breach of trust, assuming there is one, occurred on
January 22, 1958 and, relying on the Statute of Limitatior - of
British Columbia in effect prior to July 1, 1975, claims that the
time within which action must be brought is six years from the
former date. The defendant also claims that the plaintiffs have
slept too long on their rights and that she has been prejudiced
by the delay in bringing suit; (4) whether the defendant may be
granted relief from personal liability for any breach of trust
pursuant to section 98 of the Trustee Act of British Columbia
which authorizes such relief when it appears to the court that
the trustee has acted honestly and reasonably; (5) whether the
plaintiffs are entitled to compensatory damages and, in addi
tion, to punitive or exemplary damages.
Held, the action is allowed. There was a legal or "true trust"
created between the defendant and the Band, enforceable in the
courts. The Crown became trustee, effective October 6, 1957,
of the 162 acres; the Band was the beneficiary. The surrender
documents themselves set out that the 162 acres were surren
dered to the Crown, to be held by it "... forever in trust to
lease ...". The Indian Act contemplates the defendant becom
ing a trustee, in the legal sense, for Indian bands. Sections
2(1)(a), (h), (o), 18 and 61(1) of the Act provide that reserves
and Indian moneys are held by the Crown for the use and
benefit of Indians or bands. The defendant, through the persons
handling this matter in the Indian Affairs Branch, knew, early
on, the defendant was a potential trustee in respect of any land
which might be leased to the golf club. The resolution passed
by the Band Council approving the submission to the Band of
the surrender documents for the leasing of the 162 acres of
land, does not refer to an unqualified surrender for leasing to
anyone. Its whole implication is that the contemplated surren
der was for purposes of a lease with the golf club on terms.
From the date of the resolution on, all discussions with the
Band Council were confined to the proposed lease of those
particular lands, to the golf club. The defendant, through the
personnel and officials of the Indian Affairs Branch, breached
her duty as a trustee. The 162 acres were not leased to the golf
club on the terms and conditions authorized by the Band.
Substantial changes were made. Band approval ought to have
been obtained regarding those changes. There was a duty on
the defendant to do so. The probabilities are the Band members
would not have, if all the terms of the lease of January 22, 1958
had been before them, surrendered the 162 acres. The conduct
of the Indian Affairs Branch personnel amounted to equitable
fraud. There was not fraud in the sense of deceit, dishonesty or
moral turpitude on the part of those officials. But the failure to
return to the Band or Council, after October 6, 1957, for
authorization as to the proposed terms of the lease was "... an
unconscionable thing for the one to do towards the other".
Furthermore, there was not lack of reasonable diligence on the
part of the Band and its Councils in ascertaining the terms of
the golf club lease. The Band had no reason to think that a
lease, with terms different from what they had been led to
believe would be the case, had been entered into. The first
review period did not come up until 1973. It was not until
March 1970 that the Band discovered the true state of affairs
and obtained a full copy of the January 22, 1958 lease. The
plaintiffs have brought themselves within the curative provi
sions of subsection 6(3) of the Limitation Act of British
Columbia which postpones the running of time against a plain
tiff in an action for breach of trust. The alleged prejudice to the
defendant by reason of this suit not having been brought until
1975 is without merit. There would not necessarily have been, if
the defendant's witness and key figure in the dealings was alive,
an opposite version of the facts. The defence of laches thus fails
for all the reasons previously cited. There is no inequity in
permitting the plaintiffs' claim to be enforced. The defendant
has not been induced, by any delay, to alter any position. The
defendant's request for relief from personal liability cannot be
granted. The court referred to in section 98 of the Trustee Act
is the Supreme Court of British Columbia. The provision
cannot, therefore, -confer relieving jurisdiction on this Court.
The plaintiffs, by the breach of trust by the defendant, have
suffered a very substantial loss which is assessed at $10,000,-
000. The plaintiffs, however, are not entitled to exemplary
damages. The finding that the Indian Affairs Branch personnel
did not have the right to negotiate the final terms of the lease
without consultation with the Band does not convert their
actions into oppressive or arbitrary conduct warranting punish
ment by way of exemplary damages.
Kitchen v. Royal Air Force Association [1958] 1 W.L.R.
563, followed. Tito v. Waddell (No. 2) [1977] 3 All E.R.
129, considered. Frigidaire Corp. v. Steedman [1934]
O.W.N. 139, considered. Penvidic Contracting Co. Ltd. v.
International Nickel Co. of Canada, Ltd. [1976] 1 S.C.R.
267, considered. Rookes v. Barnard [1964] A.C. 1129,
considered. Massie & Renwick Ltd. v. Underwriters'
Survey Bureau, Ltd. [1940] S.C.R. 218, referred to. Nes-
bitt, Thomson & Co. Ltd. v. Pigott [1941] S.C.R. 520,
referred to. Taylor v. Davies [1920] A.C. 636 (J.C.P.C.),
referred to. Eddis v. Chichester Constable [1969] 2 Ch.
345 (C.A.), referred to. Joncas v. Pennock (1962) 32
D.L.R. (2d) 756 (Alta. S.C.T.D. and A.D.), referred to.
Zbryski v. City of Calgary (1965) 51 D.L.R. (2d) 55
(Alta2S.C.T.D.), referred to. Fales v. Canada Permanent
Trûsi Co. [1977] 2 S.C.R. 302, referred to. Toronto-
Dominion Bank v. Uhren (1960) 32 W.W.R. 61 (Sask.
C.A.), referred to. Joyce v. Yeomans [1981] 1 W.L.R. 549
(United Kingdom C.A.), referred to. Cassell & Co. Ltd. v.
Broome [1972] A.C. 1027, referred to. St. Ann's Island
Shooting and Fishing Club Ltd. v. The King [1950]
S.C.R. 211, referred to.
ACTION.
COUNSEL:
M. R. V. Storrow, S. R. Schachter and J. I.
Reynolds for plaintiffs.
G. O. Eggertson, A. D. Louie and C. J.
Pepper for defendant.
SOLICITORS:
Davis & Company, Vancouver, for plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
COLLIER J.: This action is brought by the Chief
and Councillors of the Musqueam Indian Band on
their own behalf and, in effect, for the whole Band.
The litigation was commenced on December 22,
1975. The Band seeks a declaration that the Fed
eral Crown was in breach of "its trust responsibili
ty" in respect of the leasing, on January 22, 1958,
of approximately 162 acres of land on Musqueam
Indian Reserve No. 2. Very substantial damages
are claimed.
At the material times, the legislation governing
Indians, Indian bands and Indian lands was the
Indian Act'. The hierarchy in Indian Affairs in the
' R.S.C. 1952, c. 149, as amended by S.C. 1952-53, c. 41;
S.C. 1956, c. 40; S.C. 1958, c. 19.
1950's was as follows: at the top was the Minister
of Citizenship and Immigration; then, a Deputy
Minister, a Director of Indian Affairs, and under
the latter, two Superintendents—one of Agencies
and one of Reserves and Trusts. Those officials
were in Ottawa.
In British Columbia, there was an Indian Com
missioner for B.C. At the relevant times in this
matter, William S. Arneil held that position. He
died in 1971. Under him was a District Superin
tendent. One of the key figures in the matters
giving rise to this litigation was Frank Earl
Anfield. He had succeeded one H. E. Taylor as
District Superintendent in 1954 or 1955. Anfield's
position was sometimes described as Officer in
Charge of the Vancouver Agency. He died on
February 23, 1961.
The Indian Act provided that Indian reserves
should be held by the Crown in right of Canada
for the use and benefit of the respective bands for
which they were set apart (subsection 18(1)).
Lands in a reserve could not be sold, leased or
otherwise disposed of unless they were surrendered
to the Crown by the band (section 37). Surrenders
could be absolute or qualified, conditional or
unconditional (subsection 38(2)). To be valid a
surrender had to be made to the Crown and
assented to by a majority of the electors of the
band at a meeting (paragraphs 39(1)(a) and (b)).
A surrender had to be accepted by the Governor in
Council.
Musqueam Indian Reserve No. 2 (the "re-
serve") fell, as did the Indian Band, under the
jurisdiction of the Vancouver Agency. In 1955 the
reserve contained 416.53 acres. The Band at that
time numbered 235.
The Vancouver Indian Affairs Branch recog
nized the reserve was a valuable one, and that it
had potential. Anfield reported to Arneil on Octo-
ber 11, 1955 (Ex. 5), in part as follows:
The future of the valuable Reserve, situated within the
charter area of the City of Vancouver, is of paramount concern
to the Indians as well as others. Applications are on file for the
acquisition by sale and lease of large areas of the unused, as
well as the used portions of this Reserve, but it is practically
impossible to get into any workable negotiations until this
problem of individual land holdings is settled once and for all.
The Department cannot lightly refuse allotment of domestic
land holdings to individual Band members. This is their right.
But to permit individual ownership of large unused areas with
the right to lease on an individual basis can only end in
economic disaster for the Band as a whole. The area is present
ly zoned against industry and for the present is restricted to
agricultural use, but this could easily be changed to such uses
as golf courses, and eventually to residential occupancy: these
uses of course to be operative only on alienation of the reserve
by sale or lease. Long term development of the reserve for the
benefit of the Band should be by the leasing of large areas on
the best possible terms.
In a later report to Arneil on September 17,
1956 (Ex. 9) Anfield suggested a detailed study be
made of individuals' land requirements on the
reserve, the requirements for band purposes (such
as halls, schools, etc.) and the extent of unrequired
land. He recommended not just an expert land
value appraisal be made, but a land use planning
survey "... aimed at maximum development pro
viding long term revenue for the Band ...". He
went on:
It seems to me that the real requirement here is the services of
an expert estate planner with courage and vision and whose
interest and concern would be as much the future of the
Musqueam Indians as the revenue use of the lands unrequired
by these Indians. It is essential that any new village be a model
community. The present or any Agency staff set up could not
possibly manage a project like this, and some very realistic and
immediate plans must be formulated to bring about the stated
wish of these Musqueam people, the fullest possible use and
development for their benefit, of what is undoubtedly the most
potentially valuable 400 acres in metropolitan Vancouver
today.
He then referred to a possible leasing of a
low-lying area to the City of Vancouver for sani
tary fill purposes. He continued:
Such an operation would fill the low lying area of about 150
acres to a level comparable to the rest of the Reserve. If any
new village were located at the west end of the Reserve, the
lease rentals would, if paid in advance, cover a considerable
portion of the cost of moving. There would then be left for lease
development some 300 acres of land levelled: another potential
"British Properties"; as adjacent and unfearful of an Indian
Reserve as is its famous counterpart in West Vancouver. Proce
dure to bring this result to pass would appear to be as follows:
1. To have the Band approve at Band fund cost an expert land
use survey development plan, with valuation appraisal. (It is
conceivable that this would be undertaken at cost by the U.B.C.
or some large real estate corporation).
2. To secure from the Band, a resolution requesting (a) the
location and development of a new village site of approximately
100 acres. (b) submission of documents for the surrender for
leasing of all lands unrequired for such village site, to be
approximately 316 acres, with all revenues to go to Band funds.
3. To advise all presently interested parties in land use on this
Reserve that the unrequired areas, when defined and surren
dered, will be publicly advertised for lease use and that such
advertisement will not likely be within twelve months.
I turn, at this point, to a brief summary of the
plaintiffs' allegations in this lawsuit. On October
6, 1957, by a majority vote, the members of the
Band approved a surrender to the Crown of 162
acres of prime land. The surrender was
... in trust to lease the same to such person or persons, and
upon such terms as the Government of Canada may deem most
conducive to our welfare and that of our people.
But at the surrender meeting, the Band was told
by Anfield the land would be leased, on a long-
term basis, to the Shaughnessy Heights Golf Club,
which proposed to build a new golf course on the
acreage. A lease was in fact formally entered into
on January 22, 1958 between the defendant and
the golf club. The Band alleges that a number of
the terms and conditions of the eventual lease are
different from those they were told about before
the surrender vote; that some of the lease terms
were not disclosed to them at all. Those matters
are asserted against the defendant in support of
the claim of failure to exercise the requisite degree
of care and management as a trustee. It is alleged,
in addition, the defendant, as a trustee, failed to
consider alternatives other than leasing for golf
club purposes 2 . All this, it is claimed, has deprived
the plaintiffs of increased revenue in the past; it
will deprive the Band of probable increased reve
nue in the future so long as the lease remains in
force.
2 There are other allegations of fault on the part of the
defendant, as trustee, in the statement of claim, and in further
particulars filed in the action.
I return to the factual background preceding the
surrender.
I have referred to two reports by Anfield (Exs. 5
and 9).
In 1956 the golf club became interested in
obtaining land for a new site. Its operation at that
time was at 33rd Avenue and Oak Street in Van-
couver. It leased its golf course land there from the
C.P.R. The lease was to expire in 1960. The
indications were it would not be renewed. The land
was too expensive to purchase. The golf club began
to explore, among other prospects, the possibility
of obtaining land on the Musqueam Reserve.
There were others interested, as well, in acquir
ing land interests in the reserve. A representative
of a well-known Vancouver real estate firm made,
in February 1956, inquiries of Indian Affairs offi
cials in Ottawa. Interest was expressed by the firm
in a long-term lease on certain land in Capilano
Indian Reserve No. 5 in West Vancouver, and in
securing land on the Musqueam Reserve. The real
estate firm was also aware of the golf club's inter
est. (See Exs. 7 and 8.) That firm's interest, in
some kind of development, continued throughout
1956. Anfield and Arneil knew of this. (See Exs.
15 and 16.)
The witness, C. E. Kelly, testified. I accept his
evidence. From 1955 to 1957 he tried to work out
some kind of arrangement with Indian Affairs
officials, particularly Anfield, to develop lots on
the reserve for housing. He suggested long-term
lease arrangements. When he mentioned he would
be willing to discuss it with the Band Councillors,
he was told by Anfield not to; to deal only with the
Indian Affairs personnel.
The witnesses from the Band called on behalf of
the plaintiffs all testified they were never told of
any interest, or proposals for development, other
than that evinced by the golf club. I accept their
evidence.
I shall, at this stage, deal with the question of
the credence and weight to be given to the testimo
ny of the various members of the Band. I have
particularly in mind their testimony as to what
they were told, or equally important, not told, by
Anfield and others in 1955, 1956, 1957 and
1958—as to the Shaughnessy proposals, the lease
terms and other matters. I have in mind, as well,
their testimony as to attempts to obtain copies of
the lease, and as to when the Band first became
aware of the actual terms of the golf club lease.
Counsel for the Crown argued all that evidence
should be subjected to close scrutiny; Mr. Anfield
is dead; he was the key player for the Indian
Affairs Branch; the Band members have, over the
years, now convinced themselves of certain things
that did not really happen; it is all hindsight; there
is no one on the defence side to refute the plain
tiffs' witnesses.
I have, indeed, carefully scrutinized and con
sidered the testimony of the Band members, Coun
cillors, and Chiefs and former Chiefs. I have kept
in mind that Mr. Anfield is not here to present
what, the Crown suggests, is an opposite version. I
do not agree there would necessarily have been, if
Mr. Anfield and Mr. Arneil were alive, an oppo
site version. I found the Band members to be
honest, truthful witnesses. They did not, in my
assessment, conjure up the key evidentiary matters
disputed by the defendant. Nor, in my view, was
their evidence based on hindsight and reconstruc
tion. On some matters, which I will later refer to,
the Band members' testimony is, on analysis, sup
ported by other evidence.
I therefore accept the plaintiffs' evidence as
given by the various Band members who were
called as witnesses.
I return to the facts.
By October 1956, the Band seemed to be in
agreement with the general idea that unrequired
land should be leased. (See Exs. 9 and 11.) The
Band Council authorized a land appraisal to be
done. It was to be paid out of Band funds. The
Indian Affairs Branch requested the appraisal be
done by personnel of the Veterans' Land Act
administration. The Superintendent of Reserves
and Trusts wrote (Ex. 13):
This Reserve consists of some 416 acres and is located in the
southwest section of the City of Vancouver and immediately
opposite lands held by the University of British Columbia. It
will be realized from this that the Reserve is situated in an area
of comparatively high valued land and no doubt has consider
able potential revenue for the Band if properly managed.
A Mr. Alfred Howell did the appraisal. His
report is dated December 28, 1956. Howell was a
qualified appraiser as to land values. But he was
not a land use expert as recommended by Anfield
in Exhibit 9. The Band was not given a copy of the
Howell report. They did not see one until after this
litigation started. But some of the contents of
Howell's report were given to the Band Councillors
and Band. I shall refer later to that evidence.
Howell, for valuation purposes, divided the
reserve into four areas. An area of 220 acres
(including the 162 acres eventually leased to the
golf club) was classified as "First Class Residen
tial Area". The other major area was low-lying
land of approximately 157.5 acres. It is not neces
sary to describe that or the other two areas.
Howell used the comparative approach for the top
220 acres. He arrived at a figure of $5,500 per
acre, a total of $1,209,120. The low-lying land he
valued at $625 per acre.
Even before the appraisal was carried out,
Arneil and Anfield had met with City of Vancou-
ver officials in connection with the leasing of the
low lands to the City of Vancouver. Arneil and
Anfield, at that meeting, had in mind, as well,
leasing 150 acres to the golf club at "... a figure
of say $20,000 to $25,000 a year." (See Ex. 12.) In
a later letter, dated February 5, 1957, Arneil
referred to a "contemplated" meeting with city
and golf club officials in respect of long-term
leases of land.
The Howell appraisal report is dated December
28, 1956. Copies of it did not seem to be generally
available to Mr. Arneil and Mr. Anfield until
sometime in February of 1957. Arneil wrote the
Indian Affairs Branch in Ottawa on February 5,
1957 (Ex. 18). He said that Howell had shown
him (Arneil) a copy of the appraisal. He requested
Ottawa to send duplicate copies "... with any
comments you care to make prior to my treating
the report as official." The last paragraph of the
letter was as follows:
I might add that a meeting is contemplated with City Hall
officials who desire to acquire a large area of land on long term
lease, and also with officials of the Shaughnessy Golf Club who
are similarly interested.
The documentary evidence at trial showed that
meetings and discussions indeed took place be
tween Anfield and Mr. R. T. Jackson and Mr.
E. L. Harrison. Jackson was the president of the
golf club in 1956, and the early part of 1957.
Harrison was on the board of directors and suc
ceeded Jackson as president some time in 1957.
The following is a summary of those meetings
and discussions:
Exhibit 19 is a copy of a letter dated February
13, 1957, from Anfield to Jackson. The letter
indicates the appraisal report had been received;
the area in which the golf club was interested was
zoned residential; that area was appraised at more
than $5,000 an acre; on the basis of a possible
rental of 150 acres, at a minimum of 5%, the
annual rental would be $37,500. A hand-written
note by Anfield, dated two days later, indicates the
letter was withdrawn. Instead, the matter, includ
ing the appraisal values, was discussed with Jack-
son and Harrison and the Director of the Veterans'
Land Act. Part of the note appears to me to read:
"appraisal values reviewed—Shaughnessy Golf
Club to review situation and advise further."
I note here that the golf club was, at this stage,
being given information as to the appraised value
of the lands. But the Band, according to the mem
bers who gave evidence and whose testimony I
have accepted, was, at that time, given no
information.
Exhibit 20 is a memo by Anfield dated March
13, 1957. At the top is "Mr Harrison", underneath
is a note "minimum rental expected for 150 acres
would be in the neighbourhood of $40,000 a year."
The rest of the memo is a note to the effect that
the City of Vancouver was advised that a lease of a
portion of the low lands would be in the neighbour
hood of $16,560 a year.
On April 1, 1957 Anfield wrote Jackson (Ex.
21). The opening paragraph read as follows:
We have been giving a lot of thought to the suggestion made at
our recent discussions that we endeavour to come up with a
relative value of the three different areas shown on the card
board sketch received from Mr Harrison recently.
The rest of Anfield's letter went on to refer to a
discussion with Mr. Howell as to certain areas
outlined on Harrison's cardboard sketch. Anfield
advised the average value of $5,500 per acre could
not be reduced. He said "... (Howell) ... thinks
that we would be well advised to stand on the basis
of $5500 per acre value, capitalized at 6% to
determine the rental right across the line." The
second last paragraph was as follows:
1 thought I should let you have this information as I am well
aware that the financial angle of this thing is going to be quite
likely the determining factor in your thinking. I trust that this
information may assist you and your committee in further
consideration of any submission that your Shaughnessy Golf
Club may care to make to this Department on behalf of the
Musqueam Indians, to whom eventually, of course the submis
sion must be presented, and whose decision will be final.
On April 4, 1957 Harrison, now the president of
the golf club, wrote Anfield. This is a very impor
tant document. I set it out in full:
Dear Sir:
Re: Musqueam Indian Reserve No. 2
Following our discussion yesterday, I am writing to set out
the terms which I would be prepared to place before our
members for their consideration as a basis for leasing part of
the above Indian Reserve. These terms are as follows:
1. The area to be leased comprises approximately 160 acres of
the Indian Reserve and is in the location discussed at our
meeting yesterday.
2. We are to have the right to construct on the leased area a
golf course and country club and such other buildings and
facilities as we consider appropriate for our membership.
3. We will require a right-of-way over the part of the Reserve
lying between Marine Drive and the leased area to give such
convenient access as we need.
4. The initial term of the lease will be for the period of fifteen
years commencing May 1st, 1957, and the club will have
options to extend the term for four successive periods of fifteen
years each, giving a maximum term of seventy-five years.
5. The rental for the first "fifteen years" of the term of the
lease will be $25,000.00 per annum to be paid in advance on the
anniversary date each year of the execution of the lease, the
first payment of $25,000.00 to be made as soon as the lease has
been prepared, executed and delivered.
6. The rental for each successive fifteen year period of the term
will be determined by mutual agreement between your Depart
ment and the club and failing agreement, by arbitration pursu
ant to the "Arbitration Act" of the Province of British
Columbia, but the rental for any of the fifteen year renewal
periods shall in no event be increased or decreased over that
payable for the preceding fifteen year period by an amount
more or less than 15% of the initial rent as set out in 5 above.
7. The amount of rent to be paid for each successive fifteen
year period shall be determined before we are required to
exercise our option to extend for that period.
8. We will pay all taxes assessed against the leased area.
9. We will pay the reasonable cost of relocating on other parts
of the Reserve, any Indian houses presently on the leased area.
10. At any time during the term of this lease, and for a period
of up to six months after termination, we will have the right to
remove any buildings and other structures constructed or
placed by us upon the leased area, and any course improve
ments and facilities.
If you would advise me of your approval of these general
terms by Monday, April 8th, I could arrange with our Directors
to call a special meeting of the membership in the immediate
future.
On April 7, 1957 there was a Band Council
meeting. The evidence before me is that Mr.
Anfield arranged practically all of the Band Coun
cil meetings and full Band meetings of the Mus-
queam Band. It was Anfield's practice to preside
at those meetings. He frequently kept the minutes.
In the case of this meeting there are two sets of
minutes. One set was kept in handwriting by
Andrew Charles Jr. (Ex. 23). He was a member of
the Band. He was 25 years old at the time. The
other set of minutes was kept by Anfield. His
practice appears to have been to have them typed
at a later date.
I have compared the two sets of minutes.
Anfield's are in a little more detail but the two sets
cover, in substantially the same way, the items of
business discussed in respect of the reserve.
Charles Jr. noted that Anfield had advised the
highest possible appraisal market sales value of the
reserve was $1,346,000. Charles Jr. noted also that
Anfield had "submitted" a formal application by
the golf club to lease 160 acres. The initial term of
the lease was to be for 15 years commencing May
1, 1957. The club was to have options to extend
the term for four successive periods of 15 years.
The Charles Jr. minutes do not record the pro
posed annual rental.
Anfield's minutes read as follows (Ex. 24):
2. The Superintendent then placed before Council the applica
tion of Shaughnessy Golf Club of Vancouver for a long term
lease of approximately 160 acres of land as outlined generally
on the McGuigan survey plan at a rental for the first lease
period of 15 years of $25,000.00 per year, with options for four
additional 15-year periods on terms to be agreed upon. [My
underlining.]
Both sets of minutes recorded that Council passed
a resolution approving the lease of unrequired
lands to Shaughnessy Golf Club and the submis
sion to the Band as a whole of surrender docu
ments in respect of the 160 acres.
The evidence on behalf of the plaintiffs is that
not all of the terms of the Shaughnessy proposal
were put before the Band Council at that meeting.
William Guerin said copies of the proposal were
not given to them. He did not recall any mention
of $25,000 per year for rental. He described it as a
vague general presentation with reference to
15 -year periods. Chief Edward Sparrow said he
did not recall the golf club proposal being read out
in full.
I accept the evidence of William Guerin and
Chief Sparrow on this point. The minutes by
Charles Jr. and Anfield suggest, to me, only a
general indication was given of the proposal by the
golf club to lease approximately 160 acres for an
initial term of 15 years, with options for additional
15 -year periods. I note the Charles Jr. minutes
record the exact words of term 4 of the golf club
proposal. If the other terms, including rent, had
been read out, I am sure Charles Jr. would have
recorded them. I note the Anfield minutes on this
point conclude with the words "... on terms to be
agreed upon".
On April 11, 1957, Arneil wrote W. C. Bethune,
the Superintendent of Reserves and Trusts, in
Ottawa. That letter could not be found. But the
Superintendent's reply to Arneil dated April 24,
1957 became Exhibit 26. Bethune questioned the
adequacy of the $25,000 annual rental for the first
15 years. At an investment return of five to six per
cent, he said the rental value per acre would be
somewhere between $250 to $300. Using
Bethune's figures, the rental value would have
been between $40,000 and $48,000 per year for
the first 15 years. The golf club proposal, for 150
acres, meant an investment return of approximate
ly 3%. Bethune suggested to Arneil the matter
should be discussed with Howell, and his opinion
be obtained as to what Howell felt the Indian
Affairs Branch could expect to obtain on leasing
this area for a long term, as contemplated by the
golf club.
Anfield then discussed the matter with Howell.
He gave him copies of Bethune's letter. Anfield
formally wrote Howell on May 16, 1957. He asked
for Howell's written opinion as to whether the
$25,000 per year rental for the first 15 years was
"just and equitable". He pointed out that in a
long-term lease of 75 years it was conceivable the
expected rate of return might not exceed 5%.
Howell was not given all the details of the
Shaughnessy proposal. He did not know of term 6
where rent increases or decreases for the 15-year
renewal periods were limited to 15% of the initial
rent of $25,000, or $3,750. Nor was he made
aware the golf club proposed to have the right, at
any time during the term of the lease, or up to 6
months after termination, to remove any buildings
or improvements.
I digress slightly. The original Shaughnessy pro
posal provided for the rent for each successive
15-year period to be mutually agreed upon. Failing
agreement, the matter was to be decided by arbi
tration. There was no stipulation in the April 4
proposal, as in the lease ultimately entered into,
that on arbitration the rent would be determined
as if the land were in an uncleared and unim-
proved condition, and restricted to use as a golf
course. The Shaughnessy proposal provided, as I
read it, the rent could never be increased or
decreased by more than $3,750 per year in any of
the successive 15-year periods.
Howell replied to Anfield on May 23, 1957 (Ex.
33). He had re-checked his values in respect of the
high land on the reserve. He pointed out the true
test of value would be to offer the area on the
market for development, and see what offers
resulted. He expressed the view a 75-year lease,
adjustable over 15 years and made with a finan
cially sound tenant, eliminated any risk factor. On
that basis, he felt the then government bond rate
of 3.75% was the most that could be expected. He
went on to justify the reduction of the rate of
return to 3%. Howell had spoken with the secre
tary of the golf club. He had been told the club felt
it might spend one million dollars in buildings and
improvements. Howell wrote: "These improve
ments will revert to the land at the end of the
lease". He went on to point out a golf course would
enhance the value of the surrounding reserve prop
erty. He wrote further:
However, if their offer is accepted, the Department will be in a
much sounder position to negotiate an increase in rental in
fifteen years' time, when the Club will have invested a consider
able amount of capital in the property, which they will have to
protect.
He concluded by expressing the opinion the wise
course would be to accept the golf club's offer.
Howell gave evidence at trial. He said he
approved, in 1957, the 3% return rate, for the
reasons given in his letter: the then bond rate was
3.75%; the golf club was not a financial risk; the
improvements would revert to the Band. In cross-
examination he said if he had known the improve
ments would not revert to the Band, he would have
recommended a rate of return of 4 to 6%. He had
assumed, in giving his opinion to the local Indian
Affairs officials, renegotiation of the rent would be
based on the improved condition of the land and
on the highest and best use principle. He expressed
shock at the ultimate limiting 15% clause, which
found its way into the lease which was signed.
Howell was, in my view, an honest witness. I
accept his evidence as set out in the previous
paragraph. I am satisfied he would not have
expressed the opinion he gave in Exhibit 33 if he
had had all the facts before him.
Howell's letter was forwarded to Ottawa with
the request that surrender documents for lease
purposes be prepared for submission to the Mus-
queam Band. On June 13, 1957, the Director of
Indian Affairs in Ottawa recommended to the
Deputy Minister the golf club's offer should be
accepted. The Director expressed the view the
annual rental was satisfactory; but no lease would
be issued until an acceptable surrender was
received from the Musqueam Band. The Deputy
Minister gave his approval.
On July 3, 1957, Bethune forwarded the surren
der documents and other relevant material to
Arneil. He said to Arneil he would like to see the
15% limitation, set out in the golf club proposal,
removed. He suggested succeeding rentals should
be established by mutual agreement, or failing
that, by arbitration.
On July 12 Chief Sparrow and Anfield had a
conversation. The Chief had asked for certain
figures in respect of the reserve valuation. On July
16, 1957 Anfield wrote Chief Sparrow (Ex. 38) in
reply. Anfield advised the total appraised value of
the reserve was $1,360,000. He set out the differ
ent values for the various categories of land in the
reserve. He went on:
The golf club people are applying for 162 acres on the high
land. This at $5500.00 an acre shows a valuation of $891,-
000.00 and the offer of $25,000.00 per year rental for the first
ten year period in which the golf club will have to spend almost
a million dollars of capital funds works out at an investment of
3%, which is considered by the appraiser to be a very high
return for such land use.
For your information the investment value of land on which
large structures are placed goes between 5 and 6% and it is our
appraiser's frank opinion that an investment of 3% for golf club
purposes having in mind that the land in its improved state will
eventually revert to the Band is considered a very satisfactory
return.
The reference to the 10-year period was incor
rect. At a Band Council meeting on July 26, Chief
Sparrow pointed out the Shaughnessy proposal
was for 15-year terms. Anfield wrote a letter
correcting the error.
Anfield's advice as to Howell's opinion on rate
of return is, in my view, an overstatement. The
Band was never given a copy of Howell's letter of
May 23, 1957. Nor was the Band told, at that
time, the golf club proposed to have the right to
remove any improvements made to the lands.
A Band Council meeting was held on July 25,
1957 at the reserve. Mr. Anfield presided. For the
Band Council there was Chief Sparrow and Coun
cillor Gertrude Guerin. She is the mother of the
present Chief Delbert Guerin. Charles Jr., the
secretary of the Band Council, was late. Anfield
recorded the minutes.
The leasing of the 162 acres was discussed at
length. One of the problems was that a number of
Band members claimed improvements in the area,
and in other areas of the reserve. Certificates of
possession had not been issued to those claimants.
It was undoubtedly a difficult problem. Several
alternative solutions were discussed. The Council
passed a resolution that a general meeting of the
electors of the Band be held on August 23, 1957.
(This date was later changed.) The purpose of that
meeting was to consider and vote on the surrender
to the Crown of the 162 acres.
There was further discussion on the proposed
lease to the golf club. The two Band Councillors
were of the opinion the review periods should be at
10-year intervals, rather than 15.
On September 9, 1957 the Band Council passed
a resolution that the rental valuation, in respect of
the proposed lease, be "reviewed and renegotiated"
with the golf club.
On September 27, 1957 there was a Band Coun
cil meeting held at the reserve. Chief Edward
Sparrow and Councillors Gertrude Guerin and
William Guerin attended. From the Department of
Indian Affairs there was Anfield and a William
Edward Grant. Grant was described as "officer in
charge—Vancouver agency". Grant gave evidence
at the trial. He joined the Indian Affairs Branch in
1950 at Vanderhoof, B.C. In the latter part of
June 1957, he was transferred to the regional
office in Vancouver. He filled a new post, that of
Relieving Indian Superintendent. His duties were
to fill in for other superintendents in British
Columbia who were ill, or on vacation, or other
wise absent from their regular duties. At about the
same time (July 1957) Mr. Anfield was promoted
to Assistant Indian Commissioner of British
Columbia. Another member of the Department of
Indian Affairs, W. A. Anderson, was also present
at this Council meeting.
Mr. Harrison and Mr. Jackson of the Shaugh-
nessy Golf Club came to this meeting. The secre
tary, Mr. Heina attended as well.
Andrew Charles Jr. took notes of the meeting.
In the presence of the golf club representatives,
Chief Sparrow stipulated for 5% income on the
value of the 162 acres. That amounted to approxi
mately $44,000 per annum. The figure of $44,000
or $44,550 had actually been calculated by Coun
cillor William Guerin. The golf club people balked
at that figure. Some portions of Mr. Howell's
letter of May 23, 1957 were read out. Grant's
recollection was that paragraphs 4, 5 and 6 were
the only portions read.
At one stage at this meeting, the golf club
representatives were asked to step outside. The
Band Council and the Indian Affairs personnel
then had a private discussion. Anfield expressed
the view the demand of $44,550 was unreasonable.
After considerable discussion the Band Council
agreed on a suggested figure of $29,000; they
would recommend that amount to the Band as a
whole. The golf club representatives were then
brought back into the meeting. The figure of
$29,000 was put to them. They said they would
recommend it to their board of directors.
William Guerin testified the Councillors agreed
to $29,000 because it was their understanding the
first lease period was 10 years; subsequent rental
negotiations would be every 5 years; the Band
Council felt it could negotiate for 5% of the subse
quent values.
Grant's recollection of the meeting is substan
tially the same as the version I have recounted.
There are some discrepancies on minor details. It
was Grant's recollection the $29,000 figure came
from Anfield. He said Anfield advised the Council
to go ahead with the lease and in 10 years demand
a healthy increase from the golf club. It was
Grant's further recollection that some limitation
on maximum rent increases, put forward by the
golf club, was discussed. He said the Band Council
objected to this; Anfield said he would relay that
view to the Department of Indian Affairs. Grant's
testimony, which I accept, was that the Band
Council reluctantly accepted the $29,000 figure.
On Sunday afternoon, October 6, 1957, there
was a meeting of members of the Band at the
reserve. This was what has been termed the "sur-
render meeting". I, too, shall use that description.
The Band officials present were Chief Edward
Sparrow, Councillors Gertrude Guerin and Wil-
liam Guerin. Anfield presided at the meeting.
Grant was present and took notes. Those notes
were later edited somewhat by Anfield, then typed.
Charles Jr. also made notes of the proceedings.
The notes kept by Charles Jr. and Grant are
substantially the same.
Prior to the meeting Anfield had made some
notes. They appeared to be for his assistance in
explaining matters to the Band members.
According to Grant, Anfield had, at this meet
ing, a copy of a draft lease between the Crown and
the golf club. It was Grant's recollection that
Anfield made notes on the draft lease during the
meeting. The draft was not an exhibit at trial.
Grant may have been mistaken. The first draft
lease submitted as an exhibit is dated October 17,
1957. It was apparently prepared by the golf club's
solicitors. But Mr. McIntosh, the solicitor, testified
he drafted a lease in August or September of 1957.
He thought it might form a basis for discussion in
respect of the final lease terms. He had discussions
with either Anfield or Arneil in respect of that first
draft lease.
I am satisfied from reading the Grant and
Charles Jr. notes, and from the evidence of Chief
Sparrow, Charles Jr., William Guerin and Grant
that the extent of the information imparted at the
meeting, regarding the proposed surrender and
lease, was as follows: the golf club wanted to lease
162 acres; the value of the land in question was
$5,500 an acre. The original proposal had been a
lease of 150 acres at $25,000 a year; the golf club
had requested additional land; an increase to
$29,000 per year had been obtained. The lease
proposal was for 75 years, with renewal periods of
15 years. The owners of improved land within the
proposed golf course area would receive 50% of the
rental earnings; the remainder would be distribut
ed among members of the Band as a whole. In the
first 10 years, that would amount to $132,400 for
those owners of improved land, and a similar
amount for the Band as a whole. The meeting was
told of the proposed 15% limitation on rental
increases.
The notes kept by Charles Jr. state the proposed
renewal periods were to be reduced from 15 years
to 10. Grant's notes do not contain a similar record
but they refer to the sums of $132,400 "during the
first 10 years" [my emphasis].
Charles Jr.'s notes, as to the 15% limitation on
rental increases, read: "... the government did not
want any escalator clauses. (Limiting the increase
of rental increases)." Grant testified the 15-year
period and the rental increase limitation were
strenuously objected to at the surrender meeting.
The following facts are in my opinion clear, and
I make these findings:
(a) Before the Band members voted, those
present assumed or understood the golf club
lease would be, aside from the first term, for
10-year periods, not 15 years.
This is clear from the evidence of Chief Spar
row, William Guerin, Charles Jr., and Grant. Sup
port can also be found in the notes kept by Charles
Jr., and Grant. Anfield's own pre-meeting notes
(Ex. 50) state ". .. the Council have asked that the
periods be 10 years instead of 15 years." Two
newspaper items, published the day following the
surrender meeting, referred to "a 10-year agree
ment" (Ex. 54) and "$29,000 for the first 10
years" (Ex. 55). Chief Sparrow testified the news
paper reports, attributing this information to him,
were correct.
The first draft lease in evidence (Ex. 60), which
came from the defendant's documents, contains
written notations which appear to be in Anfield's
writing. The initial term is stated to be 15 years. A
note on the side of the document is "10". Another
clause refers to succeeding 15-year periods. A note
at the side refers to "6 periods of 10 years".
Finally on this point, both McIntosh and Harri-
son recall there was at some stage in the discus
sions with the Indian Affairs officers, reference to
10-year periods instead of 15-year periods.
(b) Before the Band members voted, those
present assumed or understood there would be
no 15% limitation on rental increases.
Anfield's pre-meeting notes read as follows: ".. .
the Department do not wish this put in ...". I
have already referred to Charles Jr.'s notes and
Grant's evidence on this point. On the draft lease
(Ex. 60) Anfield's note in respect of the 15% limit,
reads "not satisfactory to dept. or Indians".
There was no information given as to the
method of negotiating future rental increases. The
original golf club proposal (Ex. 22) merely pro
vided for succeeding rentals to be agreed upon, or
to be determined by arbitration.
I am satisfied that, at the time of the vote, the
Indian Affairs personnel and the Band were
against any 15% rental limitation; the Band voted
on the basis there would be no such limitation.
(c) The meeting was not told the golf club
proposed it should have the right, at any time
during the lease and for a period of up to six
months after termination, to remove any build
ings or structures, and any course improvements
and facilities.
Chief Sparrow, William Guerin and Charles Jr.,
all testified they understood from Anfield, either
at the surrender meeting or a Council meeting, all
improvements would, on the expiration of the
lease, revert to the Band. Grant testified the sur
render meeting was told that the Band could keep
all improvements made on the golf course land.
I turn now to another matter.
There are two other terms of the lease ultimate
ly entered into on January 22, 1958 (Ex. 78)
which were the subject of considerable testimony.
One was the method of determining future
rents. Failing mutual agreement, the matter was to
be submitted to arbitration. The new rent was to
be the fair rent as if the land were still in an
uncleared and unimproved condition and used as a
golf club. The other term gave the golf club the
right at the end of each 15-year period to termi
nate the lease. Six months' prior notice was all
that was required. There was no similar provision
in favour of the Crown.
These two matters were, I find, not before the
surrender meeting. They were not in the original
golf club proposal (Ex. 22). They first appeared in
the draft leases, after the surrender meeting. But
the two terms were not subsequently brought
before the Band Council, or the Band, for com
ment or approval.
I return to what went on at the surrender
meeting.
The surrender documents (Ex. 53) were read
out. The first portion provided for the surrender to
the Crown of the 162 acres. The remainder was as
follows:
TO HAVE AND TO HOLD the same unto Her said Majesty the
Queen, her Heirs and Successors forever in trust to lease the
same to such person or persons, and upon such terms as the
Government of Canada may deem most conducive to our
Welfare and that of our people.
AND upon the further condition that all moneys received from
the leasing thereof, shall be credits to our revenue trust account
at Ottawa.
And We, the said Chief and Councillors of the said Musqueam
Band of Indians do on behalf of our people and for ourselves,
hereby ratify and confirm, and promise to ratify and confirm,
whatever the said Government may do, or cause to be lawfully
done, in connection with the leasing thereof.
A vote was taken. Forty-three members voted.
There were 41 votes for the surrender and 2
against it. Another vote was then taken in respect
of payment of 50% of revenue to individual
owners. Twenty-five members voted in favour, and
3 against.
It is to be noted that the surrender (Ex. 53) is in
very wide terms. The key words are "in trust to
lease". There is no mention of the proposed lease
to the golf club. The position of the defendant
Crown, taken on examination for discovery,
(Gordon A. Poupore, questions 351-353) is that
once the surrender documents were signed the
Crown could lease to anyone on whatever terms it
saw fit. Counsel for the defendant, in argument,
took the same position.
On October 24, 1957 Anfield wrote on behalf of
Arneil (Ex. 63) to Ottawa. He attached a draft
lease prepared by the solicitors for the golf club.
The draft provided for 5 terms of 15 years each.
Anfield said:
There has been discussion with the Indians that this term
should be reduced, possibly to 10 year periods. In this regard it
should be stated that it is going to take 3 years to get this site
into operable condition, in addition to which the Club is going
to have to make a million dollar investment in a Club House
and the cost of constructing and perfecting the golf course. It
would hardly seem fair to expect a review of rentals, presum
ably upward, in as short a space of time as 10 years and we are
inclined to recommend that the 15 year period is fair and
equitable.
In respect of the 15% limitation on rental
increases he wrote as follows:
It is noted the draft lease includes an escalator clause limiting
increase and decrease to 15% of the rental in the previous
rental period. The Department, in their letter dated July 3,
1957, are obviously not happy about the inclusion of such a
clause and this matter was discussed at very considerable
length last summer with the Directors of the Shaughnessy Golf
Club. They point out that they are not a commercial firm but a
Club, with a limited membership and it is of the utmost
importance that the total financial encumbrance over the lease
period be reasonably secured. They are very definitely against
the suggestion contained in the Department's letter aforemen
tioned; that review of rentals be subject to agreement and, if
necessary, by arbitration. They feel that any such course could
be fatal in their overall planning. Having this in mind they
submitted to us an opinion by Mr. Douglas W. Reeve, obtained
by the Club, and a copy of this document is attached herewith.
This report purports to present the considered views both of
Mr. Reeve and of the Club Directors; with particular reference
to whether or not this escalator clause, with its limitation of
15%, should be contained in the lease. The Directors point out
to the Department in their request, that this 15% limitation be
retained; that they will be turning back to the Musqueam
Indian Band property of terrific value and with vast improve
ments, and they also stressed the point that a vital factor in this
entire project is the stability of the Club in its overall financial
undertaking of the project.
Mr. McIntosh testified the 15% limitation of
rent increase caused the most difficulty in negotia
tions with the Indian Affairs Branch. The Branch
did not want any such clause. The golf club
wanted it in all renewals. A compromise was
reached providing a 15% limitation in respect of
the first renewal. That compromise, according to
Mr. McIntosh, came as a result of a meeting with
Harrison, Jackson and Arneil.
Neither the views expressed in Anfield's letter
(Ex. 63), nor a copy of the letter containing them,
nor a copy of the draft lease were given to the
Band Council or Band.
Put baldly, the Band members, regardless of the
whole history of dealings and the limited informa
tion imparted at the surrender meeting, were never
consulted.
But it was their land. It was their potential
investment and revenue. It was their future.
On November 25, 1957, Bethune wrote to
Arneil (Ex. 66). He enclosed two copies of a draft
lease prepared in Ottawa. The third paragraph of
the letter was as follows:
There is, however, one item that I would like you to seriously
consider, namely the provision of paragraph three which pro
vides for the cancellation of this lease at the end of any fifteen
year period. This clause has been retained merely for the
purpose of discussion. It seems paradoxical if the club wants a
seventy-five year lease to insert the clause permitting them to
cancel it after only fifteen years. On consideration you may
come to the conclusion that the Indians have nothing to lose
even if the lease is cancelled after the first fifteen years.
The evidence indicates that a copy of this letter
was given to Mr. Grant and to Mr. McIntosh, the
golf club's solicitor, but not to the Band.
I make this comment at this stage. The evidence
adduced by the plaintiffs is to the effect Anfield
had no discussions with the Band Council, or the
Band, following the surrender meeting. None of
the documents or letters passing between the golf
club and Indian Affairs were given to the Band
Council or the Band. There were discussions
among Anfield, Arneil and golf club officers,
including the solicitors, in respect of the lease
terms. The solicitor assumed all matters discussed
were being communicated to the Band. Neither
the chief nor the Band Council were part of those
discussions nor were they advised of them.
I accept that evidence adduced on behalf of the
plaintiffs.
There are, I think, three explanations. None are
exonerations. The surrender did not specify that
any lease was to be made with the golf club. Nor
did it provide that any ultimate lease, whomever
with, had to be approved by the Band or the Band
Council. The probabilities are the Indian Affairs
people took the view they were, by the terms of the
surrender, free to negotiate for the best possible
terms, without the necessity of consulting the
Band.
I digress to contrast the procedure in respect of
the Musqueam lands with that carried out by
Anfield, in 1955 and 1956, in respect of Capilano
Indian Reserve No. 5. That reserve was held by
the Squamish Indian Band. There the Band sur
rendered 67 acres of the reserve. The operative
part of the surrender (Ex. 112) read as follows:
TO HAVE AND TO HOLD the same unto Her said Majesty the
Queen, her Heirs and Successors forever in trust to lease the
same to such person or persons, and upon such terms as the
Government of Canada may deem most conducive to our
welfare and that of our people.
Subject, however, to the following conditions:
That all leases granted under the authority of this Surrender
to be at such rental and on such terms as our Band Council
may from time to time approve by Resolution.
In that case public tenders were called for
leases. The Band rejected some of the first pro
posals. They ultimately approved a lease to Park
Royal Shopping Centre Limited. The history of
the leasing of land on the Capilano Indian Reserve
No. 5 is set out in a memo by Mr. Letcher dated
May 13, 1960 (Ex. 136). The lands now contain
the well-known Park Royal Shopping Centre.
I point back, in respect of public tenders for
lease, to one of Anfield's initial reports, in respect
of the development of the Musqueam Reserve (Ex.
9, para. 3, reproduced at p. 391 of these reasons).
The second explanation, as to why there was no
communication with the Band after the surrender
meeting, is probably that Anfield had, by reason of
his promotion, more onerous duties. His replace
ment had not yet been appointed. That did not
occur until sometime in December of 1957, when
Mr. J. C. Letcher was appointed.
The third explanation is allied to the first. At
that time and for many years before, according to
the evidence, a great number of Indian Affairs
personnel, vis-Ã -vis Indian bands and Indians,
took a paternalistic, albeit well-meaning, attitude:
the Indians were children or wards, father knew
best. Grant described Anfield, from his observa
tion of him, as falling within that description.
The practice today, and for the last ten years or
so, contrasted with the practice in the 1950's and
1960's, was set out in the evidence of Poupore and
others. Bands are now encouraged to obtain their
own land appraisals and legal advice; not so ear
lier. There was testimony before me, which I
accept, that the Musqueam Band Council had
asked for their own appraisers and lawyers, but
Anfield had told them those matters would be
looked after by the Indian Affairs Branch. In the
present era, bands are encouraged to attach key
conditions to surrender documents. That was not
usual in the past. Proposed leases are now given to
bands for their study. That was not the former
practice. Now, bands are given copies of docu
ments affecting their lands. In Anfield and Letch-
er's time, bands were not usually given copies of
documents. Nor was it the practice to see they had
free access to departmental records.
I return to the leasing of the lands on the
Musqueam Reserve.
The surrender of the lands was accepted by the
defendant by Order in Council dated December 6,
1957. Further discussions regarding some of the
terms of the lease then took place between the
solicitors for the golf club and the B.C. Indian
Commissioner's office.
On January 9, 1958 a Band Council meeting
was held. Superintendent Letcher attended. For
the Band there was Chief Sparrow and Councillors
Gertrude Guerin and William Guerin. Charles Jr.
took the minutes.
Letcher read a letter regarding the golf club
lease. It indicated the renewal periods were 15
years instead of 10. Chief Sparrow pointed out the
Band had demanded 10-year periods. William
Guerin said the Council members were flabber
gasted to learn about the 15-year terms. William
Guerin testified Letcher said the band was "stuck"
with the 15-year terms. I accept Guerin's evidence.
The Band Council then passed a resolution that it
agreed the first term should be 15 years, but
insisted the renewal terms be set out at 10-year
periods. The lease was finally signed on January
22, 1958. A copy was not given to the Musqueam
Band or the Band Council.
At this stage I shall set out the essential terms of
the lease of January 22, 1958:
1. The term is for 75 years, unless sooner
terminated.
2. The rent for the first 15 years is $29,000 per
annum.
3. For the 4 succeeding 15-year periods, annual
rent is to be determined by mutual agreement,
or failing such agreement, by arbitration
... such rent to be equal to the fair rent for the demised
premises as if the same were still in an uncleared and
unimproved condition as at the date of each respective
determination and considering the restricted use to which
the Lessee may put the demised premises under the terms of
this lease ....
4. The maximum increase in rent for the second
15-year period (January 1, 1973 to January 1,
1988) is limited to 15% of $29,000, that is
$4,350 per annum.
5. The golf club can terminate the lease at the
end of any 15-year period by giving 6 months'
prior notice.
6. The golf club can, at any time during the
lease and up to 6 months after termination,
remove any buildings or other structures, and
any course improvements and facilities.
Grant said the terms of the lease ultimately
entered into bore little resemblance to what was
discussed at the surrender meeting.
I agree.
Chief Edward Sparrow, William Guerin and
Andrew Charles Jr. were present and voted at the
surrender meeting of October 6, 1957. They testi
fied they would not have voted to surrender the
162 acres if they had known the ultimate terms of
the lease entered into between the defendant and
the golf club.
I accept their evidence. I found them to be
honest, credible witnesses. Their testimony was not
seriously affected, in my view, by hindsight.
I have already set out my findings as to what the
members of the Band knew, and did not know, at
the time of the surrender vote. The balance of
probabilities is, to my mind, the majority of those
who voted on October 6, 1957, would not have
assented to a surrender of the 162 acres if they had
known all the terms of the lease of January 22,
1958.
I so find.
The next problem is, what is the legal effect of
the various findings I have made?
The plaintiffs base their case on breach of trust.
They assert the defendant was, in all the circum
stances and at the material times, a trustee. The
defendant denies she ever became, in fact or in
law, a trustee.
The law, as to trusts in general, is succinctly,
but not completely, stated in Underhill's Law of
Trusts and Trustees (12th ed. 1970), at page 3:
A trust is an equitable obligation, binding a person (who is
called a trustee) to deal with property over which he has control
(which is called the trust property), for the benefit of persons
(who are called the beneficiaries or cestuis que trust), of whom
he may himself be one, and any one of whom may enforce the
obligation. Any act or neglect on the part of a trustee which is
not authorised or excused by the terms of the trust instrument,
or by law, is called a breach of trust.
The Crown can, if it chooses, act as a trustee.
Megarry V.C., in Tito v. Waddell (No. 2) 3 dealt
with that question, and with the position of the
Crown as trustee, as follows, at pages 216-217:
I propose to turn at once to the position of the Crown as
trustee, leaving on one side any question of what is meant by
the Crown for this purpose; and I must also consider what is
meant by `trust'. The word is in common use in the English
language, and whatever may be the position in this court, it
must be recognised that the word is often used in a sense
different from that of an equitable obligation enforceable as
such by the courts. Many a man may be in a position of trust
without being a trustee in the equitable sense; and terms such
as `brains trust', `anti-trust', and `trust territories', though
commonly used, are not understood as relating to a trust as
enforced in a court of equity. At the same time, it can hardly be
disputed that a trust may be created without using the word
`trust'. In every case one has to look to see whether in the
circumstances of the case, and on the true construction of what
was said and written, a sufficient intention to create a true trust
has been manifested.
When it is alleged that the Crown is a trustee, an element
which is of special importance consists of the governmental
powers and obligations of the Crown; for these readily provide
an explanation which is an alternative to a trust. If money or
other property is vested in the Crown and is used for the benefit
of others, one explanation can be that the Crown holds on a
true trust for those others. Another explanation can be that,
without holding the property on a true trust, the Crown is
nevertheless administering that property in the exercise of the
Crown's governmental functions. This latter possible explana
tion, which does not exist in the case of an ordinary individual,
makes it necessary to scrutinise with greater care the words and
circumstances which are alleged to impose a trust.
In this case, counsel for the Attorney-General did not
attempt to argue that the Crown could never be a trustee. He
accepted to the full Civilian War Claimants Association Ltd v
R ([1932] AC 14, [1931] All ER Rep 432), and in particular a
dictum of Lord Atkin. There, Lord Atkin said ([19321 AC 14
at 27, [1931] All ER Rep 432 at 436): `There is nothing, so far
as I know, to prevent the Crown acting as agent or trustee if it
chooses deliberately to do so'; and in Attorney-General v
Nissan ([1969] 1 All ER 629 at 647, [1970] AC 179 at 223),
Lord Pearce adopted this dictum.
In the Tito case, Megarry V.C. found, on the
particular facts and particular documents, the
Crown there was not a trustee in the true sense.
He referred to Kinloch v. The Secretary of State
3 [1977] 3 All E.R. 129.
for India in Council 4 . As to that case, he said, at
pages 220-221:
That case, of course, concerned facts which were very differ
ent from the facts of the case before me. Yet it supports certain
principles or considerations which are of relevance and impor
tance. First, the use of a phrase such as 'in trust for', even in a
formal document such as a Royal Warrant, does not necessarily
create a trust enforceable by the courts. As Lord O'Hagan said
(7 App Cas 619 at 630): `There is no magic in the word
"trust" '. Second, the term `trust' is one which may properly be
used to describe not only relationships which are enforceable by
the courts in their equitable jurisdiction, but also other relation
ships such as the discharge, under the direction of the Crown,
of the duties or functions belonging to the prerogative and the
authority of the Crown. Trusts of the former kind, so familiar
in this Division, are described by Lord Selborne LC as being
`trusts in the lower sense'; trusts of the latter kind, so unfamil
iar in this Division, he called `trusts in the higher sense'.
I pause at that point. This classification of trusts seems to
have made little impact on the books: see, e g, Lewin on Trusts
(16th Edn (1964), pp 10, 13), Underhill on Trusts and Trustees
(12th Edn (1970), p 51) and Halsbury's Laws of England (38
Halsbury's Laws (3rd Edn), p 180). There is, indeed, a certain
awkwardness in describing as a trust a relationship which is not
enforceable by the courts, though the so-called trusts of imper
fect obligation perhaps provide some sort of parallel. Certainly
in common speech in legal circles `trust' is normally used to
mean an equitable relationship enforceable in the courts and
not a governmental relationship which is not thus enforceable. I
propose to use the word `trust' simpliciter (or for emphasis the
phrase 'true trust') to describe what in the conventional sense is
a trust enforceable in the courts, and to use Lord Selborne LC's
compound phrase `trust in the higher sense' to express the
governmental obligation that he describes.
I have concluded there was, in the case before
me, a legal or "true trust", created between the
defendant and the Band. The Crown, in my view,
became trustee, effective October 6, 1957, of the
162 acres. The Band was the beneficiary.
The surrender documents (Ex. 53), themselves,
set out that the 162 acres were surrendered to the
Crown, to be held by it "... forever in trust to
lease ...". The Indian Act contemplates, as I see
it, the defendant becoming a trustee, in the legal
sense, for Indian bands. In the statute, there are
references to land being held by the Crown for the
use and benefit of bands, and moneys being held
by the Crown for the use and benefit of bands.
4 (1882) 7 App. Cas. 619.
(See paragraphs 2(1)(a), (h), (o).) Section 18, for
example, provides that reserves are held for the use
and benefit of the bands. Similarly, subsection
61(1) provides that "Indian moneys" are held by
the Crown for the use and benefit of Indians or
bands. All of the above, in my opinion, supports
the conclusion of a trust, enforceable in the courts.
During argument in this case, counsel for the
defendant sought to argue that if there were any
trust at all, it was a "political trust", and only
enforceable in Parliament. I do not know exactly
what is meant by "political trust". Rand J., in St.
Ann's Island Shooting and Fishing Club Limited
v. The Kings, in referring to the Indian Act, used
the expression "political trust". At page 219, he
said:
But I agree that s. 51 requires a direction by the Governor in
Council to a valid lease of Indian lands. The language of the
statute embodies the accepted view that these aborigenes are, in
effect, wards of the State, whose care and welfare are a
political trust of the highest obligation. For that reason, every
such dealing with their privileges must bear the imprint of
governmental approval, and it would be beyond the power of
the Governor in Council to transfer that responsibility to the
Superintendent General.
Counsel for the plaintiffs objected to any argu
ment being made on this point, because of the
failure to plead it. I gave the defendant leave, on
terms, to amend the defence to raise the point: if
an amendment were made, then the plaintiffs
would have the right to examine for discovery the
appropriate Minister of the Crown as to the facts
on which the defendant relied in support of the
plea. The defendant chose not to take advantage of
the opportunity to amend the defence.
I therefore do not propose to deal further with
the defence of "political trust".
The next issue is as to the terms of the trust.
The defence argued, if there were a legally
enforceable trust, its terms were those set out in
5 [1950] S.C.R. 211.
the surrender document (Ex. 53); the trust permit
ted the defendant to lease the 162 acres to anyone,
for any purpose, and upon any terms which the
government deemed most conducive to the welfare
of the Band; there was no obligation to lease to the
golf club on the terms discussed at the surrender
meeting; nor was there any duty on the defendant
to obtain the approval of the Band in respect of the
terms of the lease ultimately entered into.
I do not accept that contention.
The defendant, through the persons handling
this matter in the Indian Affairs Branch, knew,
early on, the defendant was a potential trustee in
respect of any land which might be leased to the
golf club. At a meeting of April 7, 1957, the Band
Council had passed a resolution (drawn presum
ably by Mr. Anfield) as follows:
That we do approve the leasing of unrequired lands on our
Musqueam I.R. 2 and that in connection with the application of
the Shaughnessy Golf Club, we do approve the submission to
our Musqueam Band of surrender documents for leasing 160
acres approximately as generally outlined on the McGuigan
survey in red pencil: and further that we approve the entry by
the said applicant for survey purposes only pertinent to said
surrender: said surveys to be at the applicant's cost and risk
entirely.
I have said the Crown knew, at that stage, it was
a potential trustee. It knew of the intent of the
Band to surrender the lands. The resolution, set
out above, does not refer to an unqualified surren
der for leasing to anyone. The whole implication of
the resolution is that the contemplated surrender
was for purposes of a lease with the golf club on
terms.
The Indian Affairs Branch, from then on, did
not give, on the evidence before me, any realistic
consideration to leasing the 162 acres to any other
interested party. From April 7, 1957 on, all discus
sions with the Band Council were confined to the
proposed lease of those particular lands to the golf
club.
In my view, the surrender of October 6, 1957,
imposed on the defendant, as trustee, a duty as of
that date, to lease to Shaughnessy Golf Club on
these conditions:
(a) A total term of 75 years.
(b) The rental revenue for the first 15 years
to be $29,000.
(c) The remaining 60 years of the lease to be
divided into six 10-year terms.
(d) Future rental increase to be negotiated
for each new term; no provisions regarding
arbitration or the manner in which the land
would be valued.
(e) No 15% limitation on rental increases.
(f) All improvements on the land, on the
expiration of the lease, to revert to the Crown.
The defendant, through the personnel and offi
cials of the Indian Affairs Branch, breached her
duty as a trustee. The 162 acres were not leased to
the golf club on the terms and conditions author
ized by the Band. Substantial changes were made,
as can be seen in the final lease document. In
respect of those changes, no instructions or author
ization were sought by the defendant, as trustee,
from the Band, the cestui que trust. Band approval
ought to have been obtained. There was a duty on
the defendant, through her personnel, to do so.
I have already found the probabilities are the
Band members would not have, if all the terms of
the lease of January 22, 1958 had been before
them, surrendered the 162 acres.
The defendant, is, therefore, liable for breach of
trust.
THE DEFENCES OF LIMITATION OF ACTION AND
LACHES
The defendant raised the defence, assuming
breach of trust, that this action is out of time: it is
barred by the relevant statutes of limitation, or by
the equitable principle of laches.
The plaintiffs led evidence to show neither the
Band nor its Councillors had knowledge of the
actual terms of the golf club lease until sometime
in March of 1970.
Andrew Charles Jr. testified he asked Superin
tendent Letcher, a number of times, for a copy of
the golf club lease. He said he was told the Band
was not allowed to have a copy of the lease. In
those years, and until the late 1960's, it was not
the practice, as I have related, of the Indian
Affairs Branch to give Band Councils copies of
documents. All that Superintendent Letcher could
say was he could not recall being asked for a copy
of the lease.
I accept the evidence, led on behalf of the
plaintiffs, that despite requests for copies of the
lease, they were unsuccessful in obtaining a copy
until March 1970. In that month, Councillor Del-
bert Guerin (now Chief) had discussed generally
the Shaughnessy Golf Club lease with Mr. W. G.
Allen, a land use officer with the Department. Mr.
Allen examined the lease, and on March 17, 1970,
wrote Guerin outlining some of the terms. The
terms, particularly the 15% ceiling on rent increase
for 1973 to 1988, astounded Guerin and others.
Later, the Band obtained a full copy.
The defendant led some evidence to try and
establish that certain Chiefs or Councillors of the
Band knew, or ought to have known, the terms of
the lease, at least as early as 1963 or 1964. This
evidence came from the witness John F. Ellis.
In 1960 Ellis was in the real estate business. He
represented a syndicate, which ultimately became
Musqueam Recreations Ltd. It was interested in
obtaining land for the development of a golf driv
ing range and a par 3 golf course. Ellis had known
Chief Edward Sparrow for many years. He spoke
with him. The Chief referred Ellis to one of his
sons, Willard Sparrow. The latter was, at that
time, a member of the Band Council. Willard
Sparrow was elected Chief for 1963 and 1964.
Negotiations between the Band and Musqueam
Recreations Ltd. went on for over three years. The
Band, at some stage, decided to surrender the land
sought. There were approximately 58 acres (ulti-
mately) involved. The land was, at the instigation
of the Indian Affairs Branch, publicly advertised
for tenders for lease. According to Ellis, the adver-
tisements stipulated the lease renewals would be
for 10-year periods; the rent would be negotiated,
on each renewal, as if the land were uncleared and
unimproved.
In 1963 Ellis and his advisers prepared a draft
lease. Prior to that, Ellis had visited Shaughnessy
Golf Club. He was given a copy of the golf club
lease to peruse. He made copies of the essential
terms. He then attended two Band Council meet
ings, in March and April of 1963, at which the
proposed lease with Musqueam Recreations Ltd.
was discussed with the Band Council. He took the
draft leases to those meetings.
Ellis felt there was some discussion, at one of
those meetings, as to why Shaughnessy Golf Club
had 15-year renewal terms while the proposal
under discussion, as set out in the public advertise
ment, was for 10-year terms. He frankly said, if
this point was discussed, the knowledge as to
15-year terms might have come from his excerpts
made from the Shaughnessy Golf Club lease, and
not from any of the Council members. My notes
indicate he paused for a noticeable period of time
before he answered the question put to him. I can
understand that. These matters took place many
years ago. He knew the terms of the Shaughnessy
lease. I suspect he assumed, at that time, the Band
and its Council knew the terms of the Shaughnessy
lease. They, in fact, did not.
In the final Musqueam Recreations Ltd. lease,
the rental payments are as follows:
(a) Fixed annual rents for the first, second and
remaining eight years of the first 10-year term.
(b) Fixed annual rents for the subsequent
10-year terms to be negotiated; failing agree
ment, the rents to be determined under the
provisions of the Exchequer Court Act.
(c) But the annual rent payable at any time
shall never be less than 10% of the gross revenue
of the lessee.
There is a further provision that no increase or
decrease of rent, arrived at in respect of a new
10-year period, shall exceed 15% of the fixed
annual rent of the preceding 10-year period.
It was Ellis' recollection the Band Council had
requested a 15% ceiling on rent increases; he sug
gested it should work both ways; the provision, as
set out above, was then agreed to.
The proposed draft lease contained a clause,
similar to the one in the Shaughnessy lease, in
respect of removal of improvements. The Band
Council objected to it. The final lease provides the
improvements revert to the Crown.
In rebuttal to the evidence of Ellis, the plaintiffs
called Gertrude Guerin, who was Band Chief in
1962, and Robert Point, who was a Councillor in
1962 and secretary in 1963. Chief Willard Spar
row and John Sparrow (the latter, according to
Ellis, had attended some meetings with Willard)
died some years ago. Mrs. Guerin and Point testi
fied that, in the discussions in respect of the Mus-
queam Recreations Ltd. lease, no mention was
made by anyone of the terms of the Shaughnessy
lease.
I accept their evidence.
Mr. Ellis tried to be fair in his testimony. But
his evidence was obviously coloured by his knowl
edge of the actual terms of the Shaughnessy lease.
The Band Council, as I have said, did not have
that knowledge. I do not think Mr. Ellis can be
right in his recollection that the Band Council
proposed a 15% limit on increases in rent "because
it was in the Shaughnessy lease". That proposal
would not be in their interest. It was something the
band strenuously objected to when that particular
Shaughnessy proposal was discussed at the surren
der meeting of October 6, 1957, and at Band
Council meetings preceding it. I suspect the Mus-
queam Recreations Ltd. group proposed the limit
on increases; that the Band stipulated for a limit
on decreases.
The plaintiffs called other witnesses to rebut the
implication of Mr. Ellis' evidence. Some were
Councillors who had discussed the Shaughnessy
lease with Willard Sparrow before he died in the
late 1960's. Others were on the Band Council in
subsequent years. All of them testified they had no
knowledge of the 15% limitation clause, the
15-year renewal terms, and the right to remove
improvements contained in the Shaughnessy lease.
Again, I accept the evidence of those witnesses.
If Councillors, during the negotiations for the
Musqueam Recreations Ltd. lease had been told
by Ellis, or anyone else, of the terms of the
Shaughnessy lease, I am convinced the informa
tion would have, over the years, been passed on.
The evidence of Mr. Ellis is, understandably,
vague and imprecise. I cannot accept it as proof of
knowledge, in 1963, by the Band and Councillors,
of the impugned terms of the Shaughnessy lease.
I find the Band and its members were not aware
of the actual terms of the Shaughnessy lease, and
therefore of the breach of trust, until March of
1970.
This action was not commenced until December
22, 1975. Chief Delbert Guerin, from March of
1970 until litigation was authorized, was endeav
ouring to obtain further information and legal
advice as to what, if anything, could be done. I
accept that explanation.
The defence that this action is statute-barred
runs as follows: if there were a breach, or
breaches, of trust, they occurred on January 22,
1958; the time within which action must be
brought is six years from that date. The defendant
relies on the British Columbia Statute of Limita
tions in effect prior to July 1, 1975 6 .
Reference must also be made to subsection
2(11) of the Laws Declaratory Act ':
2....
(1 1) Except as provided in the Trustee Act, no claim of a
cestui que trust against his trustee of any property held
on an express trust shall be held to be barred by any
Statute of Limitations:
and to section 93 of the Trustee Act 8 :
6 R.S.B.C. 1960, c. 370.
7 R.S.B.C. 1960, c. 213. This statute was later extensively
amended. Subsection 2(11) is no longer present in the new Act,
the Law and Equity Act, R.S.B.C. 1979, c. 224.
8 R.S.B.C. 1960, c. 390.
Protection of Trustees
93. (1) In any action or other proceeding against a trustee or
any person claiming through him, except where the claim is
founded upon any fraud or fraudulent breach of trust to which
the trustee was party or privy, or is to recover trust property, or
the proceeds thereof still retained by the trustee, or previously
received by the trustee and converted to his use, the following
provisions apply:—
(a) All rights and privileges conferred by any Statute of
Limitations, shall be enjoyed in the like manner and to the
like extent as they would have been enjoyed in such action or
other proceeding if the trustee or person claiming through
him had not been a trustee or person claiming through him:
(b) If the action or other proceeding is brought to recover
money or other property, and is one to which no existing
Statute of Limitations applies, the trustee or person claiming
through him is entitled to the benefit of and is at liberty to
plead the lapse of time as a bar to such action or other
proceeding, in the like manner and to the like extent as if the
claim had been against him in an action of debt for money
had and received, but so nevertheless that the Statute runs
against a married woman entitled in possession for her
separate use, whether with or without a restraint upon
anticipation, but does not begin to run against any benefici
ary unless and until the interest of such beneficiary is an
interest in possession.
(2) No beneficiary, as against whom there would be a good
defence by virtue of this section, shall derive any greater or
other benefit from a judgment or order obtained by another
beneficiary than he could have obtained if he had brought such
action or other proceeding and this section had been pleaded.
(3) This section applies only to actions or other proceedings
commenced after the first day of January, 1906, and does not
deprive any executor or administrator of any right or defence to
which he is entitled under any existing Statute of Limitations.
Section 93 was repealed effective July 1, 1975
when the new Limitation Act of British Columbia 9
came into effect.
I reject the defence contention that this action is
out of time.
Where there has been fraud, or fraudulent con
cealment of the existence of a cause of action, the
limitation period will not start to run until the
complainant discovers the fraud, or until the time
when, with reasonable diligence, the fraud ought
to have been discovered: Massie & Renwick Ltd.
v. Underwriters' Survey Bureau, Ltd. 10 ; Nesbitt,
9 R.S.B.C. 1979, c. 236.
1° [1940] S.C.R. 218 per Duff C.J., at p. 244. See also the
statement of Maclean J. at trial: [1938] Ex.C.R. 103 at pp.
126-128.
Thomson & Co. Ltd. v. Pigott"; Taylor v.
Davies 12 ; Eddis v. Chichester Constable".
The fraud asserted, to stop the running of the
statute need not be civil fraud in the sense of
deceit or moral fraud. Equitable fraud is suffi
cient. In Kitchen v. Royal Air Force Association 14 ,
the plaintiff had a cause of action arising out of
the death of her husband. Solicitors were instruct
ed. They did not commence legal proceedings
before the relevant statutory time limit came into
play. Subsequently the company, against whom
the action might have been brought, made an ex
gratia payment. This payment was not disclosed
by the solicitors to the plaintiff. Nor was the
course of conduct carried on disclosed to the plain
tiff. She did not discover all this until some years
later. She then brought action against the solici
tors for negligence. The action was not brought
until six years after the allegedly negligent acts of
the solicitors had been committed. The solicitors
sought to rely on the statute of limitations.
Lord Evershed M.R., in upholding the finding of
the Trial Judge, that the concealment or non-dis
closure prevented the running of the limitation,
said at pages 572-573:
A necessary consequence of the concealment was, as they must,
if they had given any thought to the matter at all, have
realized, was a concealment also from the plaintiff of the real
effect of their having thrown away—and I use that word
deliberately—any case which she might have possessed under
the Fatal Accidents Acts in the previous May. Does, however,
that concealment amount to fraud? I repeat that there is no
finding and no justification for any finding of dishonesty as that
word is ordinarily understood. But it is now clear that the word
"fraud" in the section which I have read, is by no means
limited to common law fraud or deceit. Equally, it is clear,
having regard to the decision in Beaman v. A.R.T.S. Ltd.
([1949] 1 K.B. 550; 65 T.L.R. 389; [1949] 1 All E.R. 465,
CA.; reversing 64 T.L.R. 285; [1948] 2 All E.R. 89) that no
degree of moral turpitude is necessary to establish fraud within
the section. What is covered by equitable fraud is a matter
which Lord Hardwicke did not attempt to define 200 years ago,
and I certainly shall not attempt to do so now, but it is, I think,
clear that the phrase covers conduct which, having regard to
some special relationship between the two parties concerned, is
an unconscionable thing for the one to do towards the other.
" [1941] S.C.R. 520 at pp. 523 and 530.
12 [1920] A.C. 636 at pp. 648-653 (J.C.P.C.).
" [1969] 2 Ch. 345 (C.A.) per Lord Denning M.R. at pp.
355-356.
14 [1958] 1 W.L.R. 563.
and at page 574:
Assuming, as I do, that the plaintiff was the appellants'
client, she was entitled to rely upon them to look after her
interests, and it was in breach of that confidence, as I think,
that they did what they did in October and November, and
concealed from her facts which would undoubtedly, if disclosed,
have brought to light what her true rights against the appel
lants were. Therefore, though I have felt considerable difficulty
about this part of the case, on the whole I have come to the
conclusion that there is here just enough established by the
plaintiff to enable her to say that there was concealment by
fraud by the appellants, and so to deprive them of the right to
set up against her the Statute of Limitations.
The principles of the Kitchen case were
approved in Joncas v. Pennock 15 and Zbryski v.
City of Calgary 16 .
The conduct of the Indian Affairs Branch per
sonnel in this case amounted, in my opinion, to
equitable fraud. There was not, as argued by the
plaintiffs, fraud in the sense of deceit, dishonesty,
or moral turpitude on the part of Anfield, Arneil
and others. But the failure to return to the Band or
Council, after October 6, 1957, for authorization
as to the proposed terms of the lease, was, in view
of all that had gone on "... an unconscionable
thing for the one to do towards the other". There
was a concealment amounting to equitable fraud.
The explanations for this failure to go back to the
Band, I have earlier theorized about. I repeat,
however, my comment: "None are exonerations".
I find also there was not, in the circumstances,
lack of reasonable diligence on the part of the
Band and its Councils in ascertaining the terms of
the golf club lease. I have already described the
parental, wardship attitude of the Indian Affairs
Branch in past years, and the practice in respect of
documents and records dealing with band affairs.
Here, the Musqueam Band had no reason to think
that a lease, with terms different from what they
had been led to believe would be the case, had
been entered into. The first review period did not
come up until 1973. What appears to have been a
chance discussion between Delbert Guerin and
Allen brought to light, in 1970, the true state of
affairs.
15 (1962) 32 D.L.R. (2d) 756 (Alta. S.C.T.D. and A.D.).
16 (1965) 51 D.L.R. (2d) 55 (Alta. S.C.T.D.).
The defendant pleaded the Limitation Act of
British Columbia (previously cited), which came
into effect on July 1, 1975. Counsel for the defend
ant, in argument, expressed his view the former
statute, and not the 1975 statute, applied. But the
pleading was not withdrawn.
If the new Act is applicable, then in my view,
the running of time against the plaintiffs is post
poned by the provisions of section 6. I set out the
relevant portions:
6. (1) The running of time with respect to the limitation
period fixed by this Act for an action
(a) based on fraud or fraudulent breach of trust to which a
trustee was a party or privy; or
(b) to recover from a trustee trust property, or the proceeds
from it, in the possession of the trustee, or previously
received by the trustee and converted to his own use,
is postponed and does not commence to run against a benefici
ary until that beneficiary becomes fully aware of the fraud,
fraudulent breach of trust, conversion or other act of the trustee
on which the action is based.
(2) For the purposes of subsection (1), the burden of proving
that time has commenced to run so as to bar an action rests on
the trustee.
(3) The running of time with respect to the limitation periods
fixed by this Act for an action
(h) for breach of trust not within subsection (1)
is postponed and time does not commence to run against a
plaintiff until the identity of the defendant is known to him and
those facts within his means of knowledge are such that a
reasonable man, knowing those facts and having taken the
appropriate advice a reasonable man would seek on those facts,
would regard those facts as showing that
(i) an action on the cause of action would, apart from the
effect of the expiration of a limitation period, have a
reasonable prospect of success; and
(j) the person whose means of knowledge is in question
ought, in his own interests and taking his circumstances
into account, to be able to bring an action.
(4) For the purpose of subsection (3),
(a) "appropriate advice", in relation to facts, means the
advice of competent persons, qualified in their respective
fields, to advise on the medical, legal and other aspects
of the facts, as the case may require;
(b) "facts" include
(i) the existence of a duty owed to the plaintiff by the
defendant; and
(ii) that a breach of a duty caused injury, damage or
loss to the plaintiff;
(c) where a person claims through a predecessor in right,
title or interest, the knowledge or means of knowledge of
the predecessor before the right, title or interest passed
is that of the first mentioned person;
(d) where a question arises as to the knowledge or means of
knowledge of a deceased person, the court may have
regard to the conduct and statements of the deceased
person.
(5) The burden of proving that the running of time has been
postponed under subsection (3) is on the person claiming the
benefit of the postponement.
On the evidence before me as to concealment,
first knowledge, means of knowledge and diligence
(which I have already outlined), the plaintiffs
have, in my opinion, brought themselves within the
curative provisions of subsection 6(3).
There remains the plea of lathes.
The plaintiffs, it is said, have slept too long on
their rights; they knew, or ought to have known, in
1958 or shortly after, of the matters they now
complain about; the defendant has been prejudiced
by the delay in bringing suit. The main prejudice
argued on behalf of the defendant is that Mr.
Anfield has died. His evidence, to rebut the plain
tiffs' claim, is no longer available.
Anfield died on February 23, 1961. The plain
tiffs could have, if they had been, on January 23,
1958, aware of the true facts, waited until at least
January of 1964 to commence action. The conten
tion of prejudice by Anfield's death loses, there
fore, a good deal of force. Mr. Arneil died in 1971.
He would undoubtedly have been called as a wit
ness if this action had come to trial before his
death. But he was not the key figure, as Anfield
was, in the dealings with the Band and Council. As
I said earlier in these reasons, I have kept in mind
that Anfield is not here to present what, the Crown
suggests, is an opposite version of the facts. But I
do not agree there would necessarily have been, if
Anfield and Arneil were alive, an opposite version.
On the other side of the coin, some members of
the Band, to whom I have made reference, died
before this action came to trial. Undoubtedly,
other members, who might have contributed evi
dence, have also died since January 1958.
The law, as to the operation and effect of the
doctrine of laches is, to my mind, accurately set
out in Halsbury's Laws of England", at para
graph 1476:
1476. The defence of ladies. A plaintiff in equity is bound to
prosecute his claim without undue delay. This is in pursuance
of the principle which has underlain the Statutes of Limitation,
vigilantibus et non dormientibus lex succurrit. A court of
equity refuses its aid to stale demands, where the plaintiff has
slept upon his right and acquiesced for a great length of time.
He is then said to be barred by his laches.
and, at paragraph 1477:
In determining whether there has been such delay as to
amount to laches, the chief points to be considered are (1)
acquiescence on the plaintiffs part, and (2) any change of
position that has occurred on the defendant's part. Acquies
cence in this sense does not mean standing by while the
violation of a right is in progress, but assent after the violation
has been completed and the plaintiff has become aware of it.
again, at paragraph 1478:
1478. Acquiescence as an element in laches. The chief element
in laches is acquiescence, and sometimes this has been
described as the sole ground for creating a bar in equity by the
lapse of time. Acquiescence implies that the person acquiescing
is aware of his rights and is in a position to complain of an
infringement of them.
Hence acquiescence depends on knowledge, capacity and
freedom. As regards knowledge, persons cannot be said to
acquiesce in the claims of others unless they are fully cognisant
of their right to dispute them. Where a plaintiff is kept in
ignorance of his cause of action through the defendant's fraud,
time will only begin to run from the time when the plaintiff
discovers the truth or ought reasonably to have done so. It is
not necessary, however, that the plaintiff should have known
the exact relief to which he was entitled; it is enough that he
knew the facts constituting his title to relief. As regards capaci
ty, there is no acquiescence, and laches is not imputed, while
the party is a minor or is mentally disordered.
and, at paragraph 1480:
1480. Change in defendant's position. Regard must be had to
any change in the defendant's position which has resulted from
the plaintiffs delay in bringing his action. This may be, for
instance, because by the lapse of time he has lost the evidence
necessary for meeting the claim. A court of equity will not
allow a dormant claim to be set up when the means of resisting
it, if it turns out to be unfounded, have perished.
and, finally at paragraph 1481:
Apart from statute, time alone was no bar to an action in a
case of express trust. Time still is no bar in certain cases of
' 7 Vol. 16 (4th ed.). See also, Snell's Principles; of Equity
(27th ed. 1973), p. 35.
breach of trust, although, where there is no statutory bar, an
action for breach of trust, like any other equitable claim, may
be barred by acquiescence, whether this consists in assent to the
breach of trust or in subsequent condonation, or by other
circumstances which, combined with delay, make it inequitable
to allow the action.
I have already found the conduct of the Indian
Affairs Branch personnel amounted to equitable
fraud; that the plaintiffs did not have actual or
constructive knowledge of the real terms of the
golf course lease until March 1970; that the plain
tiffs cannot, on the evidence and in the circum
stances here, be said to have been guilty of lack of
due diligence in not ascertaining the lease terms
sooner. I have, as well, dealt with the alleged
prejudice to the defendant, by reason of this suit
not having been brought until 1975. I have found
against that contention.
All that, in my view, removes the plaintiffs from
the reach of the equitable doctrine of laches. I see
here no inequity in permitting the plaintiffs' claim
to be enforced. The defendant—for practical pur
poses the plaintiffs' fellow citizens—has not been
induced, by any delay, to alter any position.
The defence of laches fails.
In argument, counsel for the defendant request
ed the defendant be granted, in the circumstances,
relief from personal liability for any breach of
trust. Reference was made to section 98 of the old
Trustee Act's. That section is in substantially the
same words in the present Trustee Act". I set out
the present section:
98. If it appears to the court that a trustee, however appoint
ed, is or may be personally liable for a breach of trust,
whenever the transaction alleged to be a breach of trust
occurred, but has acted honestly and reasonably, and ought
fairly to be excused for the breach of trust and for omitting to
obtain the directions of the court in the matter in which he
committed the breach, then the court may relieve the trustee
either wholly or partly from that personal liability.
The court referred to, in the previous and pre
sent legislation, is the Supreme Court of British
18 R.S.B.C. 1960, c. 390.
19 R.S.B.C. 1979, c. 414.
Columbia. The provision cannot, therefore, confer
relieving jurisdiction on this Court.
Even if this Court had such jurisdiction, I would
not, in the circumstances here, grant relief, in
whole or in part, to the defendant. The Indian
Affairs Branch personnel in entering into the golf
club lease acted, in my opinion, honestly. There
was no deliberate or wilful dishonesty towards the
Band. But the personnel, and ultimately the
defendant, did not act reasonably in signing the
lease without first going back to the Band. I
cannot see that it would be fair to excuse the
defendant.
DAMAGES
I have found the defendant was in breach of the
trust she accepted.
I have found, as well, the probabilities are the
Band, if it had known the terms of the lease of
January 22, 1958, would not have voted, on Octo-
ber 6, 1957, to surrender the lands to be leased to
the golf club.
That leads to the extremely difficult question of
damages. A great deal of evidence, at this lengthy
trial, was on that subject. Most of it was given by
experts in various fields.
The measure of damages is the actual loss which
the acts or omissions have caused to the trust
estate: Fales v. Canada Permanent Trust Co. 20
The plaintiffs are
... entitled to be placed in the same position so far as possible
as if there had been no breach of trust. All evidence bearing on
this question would be admissible. 21
One of the most difficult questions for decision
looms, in view of my factual findings, at the outset
of the enquiry into damages. If the plaintiffs had,
in effect, turned down the lease of January 22,
1958, what, likely, would have occurred?
20 [1977] 2 S.C.R. 302, per Dickson J. at p. 320.
21 Toronto-Dominion Bank v. Uhren (1960) 32 W.W.R. 61
(Sask. C.A.), per Gordon J.A. at p. 66. See also Culliton J.A.
at p. 73.
There are a number of possibilities, some of
which were canvassed in evidence, some in argu
ment, and some in neither.
One possibility, not discussed in evidence or
argument, was further negotiation and agreement
between the golf club and the Band, through the
Indian Affairs Branch. The defendant called Mr.
McIntosh, Mr. Jackson, Mr. Harrison, Mr. Pipes
and Mr. Gillespie. I shall refer to those gentlemen,
collectively, as the golf club witnesses. I conclude,
from their evidence, it was unlikely the golf club
would have agreed to deletion of the 15% limita
tion on increase of rent in the second 15-year
period, or to any reduction in the rental terms
from 15 years to 10. I also think it unlikely, based
on the evidence of McIntosh, the golf club would
have relinquished its proposal to have the right to
remove improvements at any time the lease came
to an end. Nor do I think the golf club would have
agreed to negotiations and arbitration for future
rental based on the highest and best use of the
land.
I put aside, therefore, any estimate of damages
on the basis of a suitable or desirable golf club
lease from the Band's point of view, as contrasted
with the lease now in force.
The chief witness for the plaintiffs, on the ques
tion of damages, was Mr. A. G. Oikawa. He is a
real estate appraiser, and consultant in matters
relating to real estate evaluation, marketing stud
ies and feasibility studies.
The defendant, in respect to evaluation of the
162 acres, called Mr. W. Palmer, Mr. K. W. Behr
and Mr. D. D. Davis.
Palmer is the manager of the appraisal division
in Vancouver of A. E. Lepage Western Limited.
He is also senior vice-president and chief appraiser
of the national appraisal operations of that organi
zation. Behr is an appraiser with the A. E. Lepage
organization. Davis is an experienced real estate
appraiser. He has been in the real estate business
with Ker & Ker Ltd. for over forty years. That
company is one of the larger real estate companies
in Vancouver.
Oikawa, Palmer, Behr and Davis were in agree
ment on one important point: the 162 acres was, in
1957 and 1958, and still is, a prime piece of
residential property in the City of Vancouver. All
four appraisers agreed the highest and best use for
this property, from 1958 to the present, is as prime
residential, not as a golf course.
Oikawa, and the other three, part company as to
the marketability of the property in 1958, having
in mind the restriction the land could only be
leased, not sold.
In Oikawa's opinion the land could have been
subdivided for residential single family dwellings
on a prepaid, 99-year leasehold basis. He
envisaged approximately 438 lots. He felt they
could have been marketed over five years. He
conceded there were no leases of that kind in
Vancouver in 1958. A prepaid, 99-year lease was
not, however, a unique concept. But it was an
unknown type of holding in Vancouver in 1958.
Oikawa felt, based on his research, economic con
ditions and the demand for residential lots, that
this 162 acres could have been developed, in 1958
and thereafter, on the leasehold basis I have brief
ly described.
His opinion was not shared by the three apprais
ers called by the defence. It was their view the
land could not have been developed on a prepaid,
99-year lease basis. It was their opinion the golf
club lease, as entered into, was the best probability
at the time; the Indian Affairs Branch was justi
fied in entering into the lease now in effect.
There was evidence before me that some persons
were interested in trying to obtain Indian lands for
housing development in 1957 and 1958, even on a
leasehold basis. The witness Kelly had broached a
plan, for Musqueam land, to the Indian Affairs
Branch personnel. I have already referred to that
evidence. Those plans were not, however, on the
scale envisaged by Oikawa in his evidence. There
had been some proposals, in those same years, for
housing and apartment development, when tenders
were invited in respect of the leasing of land on
Capilano Indian Reserve No. 5.
The University Endowment Lands (U.E.L.)
were, and are, almost contiguous to the Musqueam
Reserve. In 1956, a report, called the Turner
Report, had been completed and submitted, in the
latter part of the year, to the government of the
day of British Columbia. Portions of the report
were put in evidence (Ex. 179). It recommended
the development of a good deal of the U.E.L. for
single family and multiple use housing, with shop
ping plazas and other amenities. The proposed
development was to be on a long-term leasehold
basis.
Robert P. Murdoch gave evidence for the plain
tiffs. He is now the manager of the U.E.L. He
joined the organization on July 1, 1956, as assist
ant manager. Following the release of the Turner
Report he and his staff received a large number of
enquiries from persons interested in obtaining lots
or housing accommodation. Most were unfamiliar
with the leasehold concept. Most, when it was
explained to them, still expressed interest. The
staff kept a record of those who, if the Turner
Report became a reality wanted to be considered
potential buyers. Unfortunately, that record has
been lost. Murdoch said there were quite a number
of potential leasehold purchasers. The greatest
intensity of interest and inquiry was in the mid and
late 1950's. Murdoch saw no difficulty, if the
Turner Report had been acted upon, in marketing
two to three hundred lots per year until the supply
ran out.
I have earlier concluded a lease to the
Shaughnessy Heights Golf Club could not have
been entered into on the terms approved by the
Band in October 1957:
(a) $29,000 per year for the first rental period;
(b) renewal on a negotiated rental basis every
succeeding 10 years, without any restriction on
the basis on which the land would be valued;
(c) no 15% limitation on any increase in rent for
the second 10-year term;
(d) at the termination or expiration of the lease,
all improvements would revert to the Band.
Three estimates of the economic return, on the
basis of lease as a golf course, were given to me: by
Oikawa, Davis and Behr.
Oikawa first established the market value of the
162 acres, at various dates, on the basis of develop
ment on a prepaid, 99-year residential lease basis.
His research told him 6%, in 1958, was a reason
able rate of return. He arrived at an economic
rent, as of January 22, 1958, of $97,080 per
annum. The plaintiffs naturally contrast this with
the $29,000 figure actually paid for the first 15
years.
Davis used a somewhat different approach. His
is, understandably, and as he stated, theoretical.
His view was the land could not have been market
ed on a leasehold basis. But, to arrive at figures, he
calculated the value, at various dates, on a free
hold basis. He then reduced that figure because
the land was to be marketed as leasehold. In 1958
he used the same economic rent percentage as
Oikawa: 6%. That amounted, by his method, to
$61,460 per year.
Davis did another valuation. He estimated the
market value of the 162 acres, at various dates, on
the basis that the highest and best use was as a
golf course. He started out with the initial $29,000
rental per year figure of the lease now in force. His
estimates of annual rental value, as a golf course,
for various dates were as follows:
1958: $ 29,000
1968: 99,630
1973: 194,820
1978: 372,000
Oikawa's estimates of rental value, based on his
method, which I have outlined above, were:
1958: $ 97,080
1968: 231,750
1973: 615,740
1978: 1,428,300
Behr accepted the $29,000 per annum rental in
1958 as valid. He used the N.H.A. [National
Housing Act] interest rate, the Consumer Index,
Industrial Composite Wages per week, and Con
struction Wages to arrive at price trend increases
from 1958 to 1978. He calculated the weighted
increases over the base year. He then applied those
weighted increases to arrive at the reasonable eco-
nomic rent in the subsequent years. His results
were:
1958: $ 29,000
1968: 63,800
1973: 69,310
1978: 103,440
All of the above points to one conclusion. Davis
put it this way:
Knowing what we know today, with the tremendous increase in
land values and higher interest rates, all of the foregoing points
out to the fact that based upon the years 1968, 1973 and 1978,
the rental being obtained from Shaughnessy Heights Golf Club
is far too low. However, in 1958 we were not aware of any of
these facts, and the writer would have to conclude, thinking as
to how we did in 1958, that this is a reasonable lease.
My problem, unfortunately, is not whether the
present golf club lease is reasonable or not. It is to
determine the amount of loss suffered on the basis
a golf course lease would probably not have been
entered into. I have outlined the evidence, on this
one aspect of value, merely to illustrate, among
other things, the remarkable increase in value of
this and other land since 1957 and 1958.
At this stage, and before stating my conclusions,
I propose to set out, in the form of a table, the
various valuations given by the appraisers.
Market Market Rental Rental Value
Value Value Value P.A. as
Freehold Leasehold RA. golf course
Howell 890,000
1 Oikawa 1,540,000 1,618,000 97,080 6%
9 Palmer & ,
5 Behr 1,625,000 81,250 6% 29,000 (Behr)
8 Davis 1,687,500 1,024,300 61,460 6% 29,000
1 Oikawa 2,916,000 3,090,000 231,750 7 1 / 2 %
9 Behr 3,907,000 280,900 7.19% 63,800
8 Davis 4,725,000 2,578,400 219,160 8'/% 99,600
Oikawa 7,244,000 615,740 8'h%
9 Behr 9,414,200 712,650 7.57% 69,300
7 Davis 9,450,000 4,867,000 438,030 9% 194,800
3
1 Oikawa 15,870,000 1,428,300 9%
9 Behr 17,854,000 1,535,440 8.6% 103,440
7 Davis 16,875,000 8,173,800 858,250 10 1 / 2 % 372,000
Oikawa 19,837,500 1,884,600 9 1 / 2 % Oikawa adds 5%
9 annually from 1978
8 to arrive at market
3 value
Oikawa 23,805,000 2,380,500 10% Oikawa adds 5%
9 annually from 1983
8 to arrive at market
8 value
Notes: 1. Behr's rental values are calculated on freehold market value.
2. Oikawa and Davis used their leasehold values to calculate rental value.
There are surprisingly few glaring disparities
among these evaluations. When one compares the
market values, for the various years, of Oikawa,
calculated on a leasehold basis, and those of Behr
and Davis, calculated on a freehold basis, the
differences are not that great. But Davis' market
value on a leasehold basis is considerably lower
than Oikawa's, particularly for later years. I
accept Oikawa's estimates as more realistic. He
prepared them on a cost of development basis.
Davis' method was to arrive at freehold value,
then, by somewhat arbitrary percentage reduc
tions, arrive at leasehold value.
There is one noteworthy disparity: the freehold
value estimated by Howell in 1956, and the values
estimated by the others as of 1958. I do not find
any breach of trust responsibility, in respect of
that, on the defendant. I am satisfied Howell did
his best, as of December 1956. In 1958 land values
had increased. In 1978 and 1979, when Oikawa,
Palmer, Behr and Davis carried out their research,
they had the benefit of hindsight, better techniques
and better research tools.
There is another equally noteworthy agreement
in these valuation estimates. In the research and
conclusions of each, the value of the 162 acres had
increased approximately ten times from 1958 to
1978.
After a lengthy consideration of the evidence I
have concluded the 162 acres would have, at some
stage, been successfully marketed as prepaid,
99-year leasehold lots for single family, and even
tually, multi-family use. As to that kind of de
velopment, I accept the opinion of Oikawa over the
others.
But I am not persuaded the area would have
necessarily been developed in 1958, or as quickly
as Oikawa opined. One must keep in mind the
Band, in 1957 and 1958, was trying to market, on
a leasehold basis, more than the 162 acres. There
were, according to Howell, 220 acres of prime
residential land available.
Some of that land, excluding the 162 acres, has
since been developed on a 99-year leasehold basis.
A 40-acre development, known as Musqueam
Park, began at the northeast corner of the golf
course in 1965. This development was on a 99-year
lease basis, but not prepaid. The majority of the
houses were built in 1967 and 1968.
In 1971 and 1972 another area, called Salish
Park, was developed. The land is on a prepaid,
99-year lease basis.
I have no doubt the success of the Musqueam
Park and Salish Park developments was contribut
ed to, to some extent, by the presence of the golf
course. I do not accept the view, advanced by the
Crown and some of its witnesses, that it was
largely responsible for the success of those two
areas. Nor do I accept the view, propounded by
some of the defendant's expert witnesses, that
large areas of this kind (220 acres) could not be
successfully developed, on a residential leasehold
basis, without the existence of some kind of golf
course, or other attracting amenities.
As I see it, the land, but for the golf club lease,
might well have remained undeveloped for a few
years after 1958. Advertising would likely have
been done. Tenders for leasehold development
would likely have been invited. I am satisfied
proposals would have been made, and 99-year
lease agreements reached. Development might
have been, at first, slow, limited, and somewhat
experimental. In my view, the area would probably
have been well on the road to full development, on
a residential, leasehold basis, by approximately
1968 to 1971. I have chosen that somewhat arbi
trary period of time on the basis of Oikawa's
evidence as to economic, business, population, and
real estate value trends, housing accommodation
demand, and raw land shortages, all during the
period 1958 to 1973.
I turn now to quantum.
The plaintiffs put forward, in argument, four
suggested approaches for the calculation of
damages.
The first was to determine the loss of reasonable
economic rent to the band from 1958 to the expiry
of the lease in 2033. I do not propose to set out the
details of this calculation. The estimate was a
minimum damage loss of approximately 45 million
dollars. This method presupposes Oikawa's rental
income of $97,080 per year as of 1958, and his
estimates for 1968, 1973 and 1978. The calcula
tion (I am oversimplifying it) then uses the differ
ences between those figures and the golf club
rental figures to the date of trial. Estimates are
then made as to future loss.
I find only limited assistance in this method. It
assumes the land could have produced, in the
market, the rental returns indicated from 1958 on.
But my finding is, as earlier set out, it was unlikely
that return could have been reached as early as
1958. This approach also assumes the golf club
lease will be in effect until 2033. That may not be
a realistic assumption.
The second method is a variation of the first,
with certain other factors taken into consideration.
The total figure, under this approach, is again
approximately 45 million dollars. It is subject to
the same comments I made in respect of the first
method.
The third suggestion for estimating quantum is
based on the loss to the Band on the assumption
the land should, and would have been, in 1958,
developed on a residential, prepaid, 99-year lease
basis. The reversionary interest is, as well, estimat
ed. The damage calculation is estimated at approx
imately 53 million dollars.
The fourth approach is ". to determine the
loss to the band of the opportunity to develop the
land ..." as of the date of trial. It is the difference
between what the Band has received under the
present lease, and what it could receive from the
date of trial to 2033, based on the highest and best
use, as put forward by Oikawa, plus the value of
the reversionary interest. It assumes the land
having sat undeveloped until the date of trial. The
estimated damages, under this suggested method,
are approximately 71 million dollars.
I make this comment. None of these suggested
approaches are completely unrealistic. The calcu
lations, based on acceptance of all the plaintiffs'
evidence as to damages, are, to my mind, relatively
conservative.
But, as I have indicated, none of these ap
proaches take into account a very realistic contin
gency: in 1988, or at a later rental review period,
the golf club may decide, because of the obviously
high rents in sight, to terminate the lease. The
agreement gives it the right to do so.
I cannot accept the damage loss estimates cal
culated by the plaintiffs.
The estimates put forward are based, really, on
acceptance by me of all of the postulates of
Oikawa. I was impressed by his knowledge,
research, and ability. But, as I have indicated, I
take a less optimistic view than he did, of the
market possibilities in 1958. At the same time, I
do not subscribe to the views of the expert wit
nesses for the defence that, in 1958, the golf club
lease as entered into, was the only feasible business
reality.
My views are, in effect, somewhere between
those of the plaintiffs and those of the defendant.
But I have no doubt the plaintiffs, by the breach of
trust by the defendant, have suffered a very sub
stantial loss.
Counsel for the defendant argued the plaintiffs'
damages, accepting Oikawa's evidence at face
value, could not exceed $1,618,000. That was the
value of the 162 acres on a prepaid, 99-year basis
in 1958. That submission does not take into
account a number of things. I shall refer only to
two. It gives no consideration to the reversionary
value of the improvements at the end of the leases.
Nor does it take into account the investment
return on the monies received for prepaid leases.
Counsel for the defendant also argued that, on
all the evidence, the plaintiffs had suffered no loss;
that they might even have, somehow, gained. I did
not follow, or understand, that submission when it
was made. After reconsideration, I am still in the
same position.
Even though damages may be difficult, or
almost impossible of calculation, if a court is satis
fied damage or loss has indeed been sustained,
then a court must assess damages as best it can,
even if it involves guess-work.
In Frigidaire Corporation v. Steedman 22 ,
Masten J.A. is reported to have said this:
Where, as here, the liability has been finally determined, the
Court will not be deterred from ascertaining the damages by
any difficulty in securing complete evidence nor by the impossi
bility of applying a mathematical measurement so as to ascer
tain precisely the amount of damages. See Carson v. Willits
(1930), 65 O.L.R. 456, and cases there cited. Here the difficult
question arises as to the amount of the loss through economic
depression or insolvency of tenants, or other similar cause,
which the plaintiff might probably have suffered if the contract
had been carried out according to its terms and the plaintiff
had been given possession of the tenant's notes as provided in
the agreement. To estimate what might probably have hap
pened in circumstances that never arose is in the nature of
guessing, but the authorities make it plain that such is the duty
of the Court. The learned Justice of Appeal said that he
concurred in the estimate of 15 per cent. and agreed that the
judgment of the Court should be in the terms proposed by
Middleton, J.A.
On the same subject, Spence J., in Penvidic
Contracting Co. Ltd. v. International Nickel Co.
of Canada, Ltd., 23 said, in delivering the judgment
of the Court:
The difficulty in fixing an amount of damages was dealt with
in the well known English case of Chaplin v. Hicks ([1911] 2
K.B. 786), which had been adopted in the Appellate Division of
the Supreme Court of Ontario in Wood v. Grand Valley
Railway Company ((1913), 30 O.L.R. 44), where at pp. 49-50,
Meredith C.J.O. said:
There are, no doubt, cases in which it is impossible to say
that there is any loss assessable as damages resulting from
the breach of a contract, but the Courts have gone a long
way in holding that difficulty in ascertaining the amount of
the loss is no reason for not giving substantial damages, and
perhaps the furthest they have gone in that direction is in
Chaplin v. Hicks, [1911] 2 K.B. 786. In that case the
plaintiff, owing, as was found by the jury, to a breach by the
defendant of his contract, had lost the chance of being
selected by him out of fifty young ladies as one of twelve to
whom, if selected, he had promised to give engagements as
actresses for a stated period and at stated wages, and the
action was brought to recover damages for the breach of the
contract, and the damages were assessed by the jury at £100.
The defendant contended that the damages were too remote
and that they were unassessable. The first contention was
rejected by the Court as not arguable, and with regard to the
second it was held that "where it is clear that there has been
22 [1934] O.W.N. 139 at p. 144.
23 [1976] 1 S.C.R. 267 at pp. 279-280.
actual loss resulting from the breach of contract, which it is
difficult to estimate in money, it is for the jury to do their
best to estimate; it is not necessary that there should be an
absolute measure of damages in each case": per Fletcher
Moulton, L.J. at p. 795.
When Wood v. Grand Valley Railway Company, supra,
reached the Supreme Court of Canada, judgment was given by
Davies J. and was reported in 51 S.C.R. 283, where the learned
justice said at p. 289:
It was clearly impossible under the facts of that case to
estimate with anything approaching to mathematical accura
cy the damages sustained by the plaintiffs, but it seems to me
to be clearly laid down there by the learned judges that such
an impossibility cannot "relieve the wrongdoer of the necessi
ty of paying damages for his breach of contract" and that on
the other hand the tribunal to estimate them whether jury or
judge must under such circumstances do "the best it can"
and its conclusion will not be set aside even if the amount of
the verdict is a matter of guess work.
A recent remark, but I suspect directed to
assessing damages in the particular case, was
made by Waller L.J.: 24
I agree with the judge that the assessment of damage is an
exercise in guesswork.
I assess the plaintiffs' damages at $10,000,000.
In considering the amount to be awarded, I
experimented, during my deliberations, with vari
ous approaches. I did so in the hope I could
eventually set out some, even perhaps vague,
mathematical basis for coming to this sum. But I
found myself unable to set out a precise rationale
or approach, mathematical or otherwise. The
dollar award is, obviously, a global figure. It is a
considered reaction based on the evidence, the
opinions, the arguments and, in the end, my con
clusions of fact.
I shall set out, however, for the parties, factors
and contingencies I have had in mind. The list is
not exhaustive:
(a) The difficulty in determining when the 162
acres would have been developed, in what way,
and at what monetary return. This, on the basis
the present lease would never have been
consummated.
24 Joyce v. Yeomans [1981] 1 W.L.R. 549 (United Kingdom
C.A.) at p. 555.
(b) The contingency that the area might not,
even today, be satisfactorily developed, or pro
viding a realistic economic return.
(c) The astonishing increase in land values,
inflation, and interest rates since 1958, and the
fact no one could reasonably, in 1958, have
envisaged that increase.
(d) The counter-factor to (c) is that those same
tremendous increases must be taken into
account in any damage award.
(e) The possibility the present lease will remain
in effect until its expiry in 2033.
(f) The very real contingency, in my view, the
lease may be terminated at a future rental
review period.
(g) The monies which the plaintiffs have
received to date under the present lease, and
what might be received in the future if the lease
remains.
(h) The value of the reversion of the improve
ments, whether at the end of prepaid, 99-year
residential leases, or at the end of the golf club
lease.
I add this. I have not overlooked the evidence of
other experts, not already referred to, called by the
parties in respect of damages. For the plaintiffs
there were Messrs. Collisbird, Frizzell, Jefferson,
Wheeler and Tattersfield. For the defendant there
was Mr. Goldberg, and some calculations by Mr.
Boyle. I have not found it necessary to refer to
their evidence. But that does not mean I have not
considered it.
EXEMPLARY OR PUNITIVE DAMAGES
The plaintiffs sought, in addition to compensato
ry damages, exemplary or punitive damages.
Exemplary damages may come into play whenever
the conduct of a defendant has been sufficiently
outrageous to merit punishment 25 . The English
courts have narrowed the situations in which puni -
25 See McGregor on Damages (14th ed. 1980) paras. 309 et
seq.
tive damages can be awarded 26 . But they have set
out certain categories in which an award of exem
plary damages might be made 27 :
The first category is oppressive, arbitrary or unconstitutional
action by the servants of the government. I should not extend
this category—I say this with particular reference to the facts
of this case—to oppressive action by private corporations or
individuals. Where one man is more powerful than another, it is
inevitable that he will try to use his power to gain his ends; and
if his power is much greater than the other's, he might,
perhaps, be said to be using it oppressively. If he uses his power
illegally, he must of course pay for his illegality in the ordinary
way; but he is not to be punished simply because he is the more
powerful. In the case of the government it is different, for the
servants of the government are also the servants of the people
and the use of their power must always be subordinate to their
duty of service.
I cannot classify the actions of Anfield, Arneil,
and the officials in Ottawa, as oppressive, arbi
trary, or high-handed. I have already found
against any allegations of dishonesty, moral fraud,
or deliberate, malicious concealment. The Indian
Affairs Branch personnel thought they had the
right to negotiate the final terms of the lease
without consultation with the Band. I have found,
in effect, they did not have that right. That finding
does not convert their actions into oppressive or
arbitrary conduct, warranting punishment by way
of exemplary damages.
That concludes my reasons in respect of
damages.
SUMMARY
There will be a declaration that the defendant
was in breach of trust and the plaintiffs have
incurred damage as a result.
The damages are assessed at $10,000,000.
I shall not issue a formal pronouncement (judg-
ment) with these reasons. The plaintiffs have
claimed interest, if damages should be awarded.
That issue has not been argued. There are out
standing matters of legal costs, including possible
submissions on the amount of costs, and the basis
26 See Rookes v. Barnard [1964] A.C. 1129. See also Cassell
& Co. Ltd. v. Broome [1972] A.C. 1027.
27 Per Lord Devlin in the Rookes case (supra) at p. 1226.
of taxing or awarding. The plaintiffs may, there
fore, bring on a motion for judgment in which
those matters, and any other outstanding, can be
dealt with. The parties shall arrange a hearing
date with the District Administrator. Failing
agreement, I shall fix a date.
Lastly, I regret the delay in handing down this
decision.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.