On November 27, 2024, the Supreme Court of Canada (“SCC”) released a decision finding that the Government of Canada and the Government of Quebec inadequately funded an Indigenous police service, Securite publique de Mashteuiatsh (“SPM”), and that, by refusing to discuss increased funding for the SPM, the Government of Quebec breached the duty to act in good faith and the honour of the Crown.
Photo credit: Gordon Lyall
The Government of Canada, the Government of Quebec, and Pekuakamiulnuatsh First Nation entered into tripartite agreements to provide culturally appropriate police services to Pekuakamiulnuatsh First Nation in Mashteuiatsh, Quebec. The SCC found that Quebec’s refusal to renegotiate the financial contribution clause of the agreement was not consistent with the duty to act in good faith, and that Quebec’s knowledge of the underfunding and refusal to renegotiate undermined Pekuakamiulnuatsh Takuhikan’s legitimate expectations of the agreements’ purpose in maintaining the SPM. The SCC held that the honour of the Crown applies to contracts with Indigenous groups where the contract is based on Indigenous difference and involves a right of self-government.
Background
Between 2013 and 2017, government funding for the maintenance of SPM was inadequate and SPM incurred an operating deficit. Pekuakamiulnuatsh Takuhikan was forced to absorb the deficit to maintain culturally appropriate police services. Pekuakamiulnuatsh Takuhikan brought an action against the Government of Canada and the Government of Quebec seeking reimbursement for the accumulated deficit of SPM. The claim was grounded on a private law basis involving the principle of good faith and on the public law basis of the honour of the Crown.
The lower court dismissed the application finding the honour of the Crown did not apply. The Court of Appeal set aside the lower court’s decision finding Canada and Quebec’s refusal to fund the SPM to be a violation of the duty to act in good faith and the honour of the Crown. Quebec appealed.
Photo credit: Krista Robertson
The Decision
The majority of the SCC found Quebec’s refusal to renegotiate the financial contribution terms while agreeing to renew the agreement was not in keeping with the duty of good faith applicable to parties to a contract. The majority held that this duty requires a party to perform contractual obligations in good faith and show a willingness to listen to the counterparty’s interests. The obligation to contract in good faith flows from the contract, and a breach in good faith may occur by a party refusing to enter genuine negotiations. The majority observed that when the purpose of the contract depends on the existence of the relationship, refusal to negotiate can jeopardize the contract.
The majority held that the honour of the Crown applies to a contract between a government and an Indigenous group when the contract is intended to foster reconciliation. For the honour of the Crown to apply to a contract, the contract must be entered into because of Indigenous difference and involve an Indigenous right to self-government, whether established or subject to a credible claim. The majority held, “it appears the parties entered into the tripartite agreements on the basis and reason of the Indigenous difference of the Pekuakamiulnuatsh […] the agreements were entered into the context of the nation-to-nation relationship between Quebec and Pekuakamiulnuatsh Takuhikan.” The majority found that the purpose of the agreements was to ensure the provision of culturally appropriate police services, contributing to reconciliation. The majority found Quebec’s conduct to be a breach of the Civil Code of Quebec and the common law.
Conclusion
This decision confirms that the honour of the Crown can apply to a contract between an Indigenous group and the Crown when the purpose of the contract is based on Indigenous difference and the contract involves an Indigenous right of self-government.
This case summary provides our general comments on the case discussed and should not be relied on as legal advice. If you have any questions about this case or any similar issue, please contact any of our lawyers.
See CanLII for the Reasons for Judgement.