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Completed Inquiries – Reports Released

01/08/1997

Sumas Indian Band [1919 Indian Reserve 7 Surrender] – August 1997

The Sumas Band received its reserves (IR 6 and 7) when the Joint Reserve Commission of Canada and British Columbia set apart land in 1879. IR 7 originally comprised 160 acres of land, which was rich, seldom flooded, and well suited to cultivation, but which was heavily wooded and would require considerable clearing before it could be used for farming. Most band members resided on the 610-acre IR 6, of which two-thirds was unsuited to cultivation.

At the request of the McKenna-McBride Royal Commission, Indian Agent Peter Byrne estimated the value of IR 7 in 1916 to be $13,000 (including $1000 for improvements). In 1919, the Soldier Settlement Board (SSB) became interested in acquiring IR 7 for the use of eight soldiers who had applied to homestead the "unoccupied" reserve. Byrne was instructed to meet with SSB Commissioner F.B. Stacey to "agree upon a fair and reasonable valuation for this reserve." Although Byrne believed the land to be worth $100 per acre, based on "the opinion of the settlers in the vicinity," the agreed price was $80 per acre. Stacey himself had been prepared to offer $85 per acre, but "considered $80.00 per acre a good price for it."

The Band was "divided" over the surrender and, in May 1919, Byrne was doubtful whether the majority would support it. Following approval of the deal by the SSB in July, Byrne was authorized to submit the surrender to the Band and was provided with $4500, to be distributed on a per capita basis to band members should they agree to the surrender. After reporting in July and September that it would be difficult to obtain a surrender, Byrne managed in October 1919 to obtain consent to the surrender from all nine members on the Band's voting list. Eight signed the surrender document. The evidence did not indicate why the Band changed its position.

Title was transferred to the SSB by Order in Council on December 1, 1919, at which time the balance of the purchase price ($7780) was paid to the Band. When the SSB inspected and surveyed the land in 1920 for the purposes of subdivision, it concluded that, after deductions for a Vancouver Power right of way, roads, and the Sumas River, only 135.9 acres of the reserve were available for settlement. Moreover, having regard for the costs of clearing, the land was considered to be worth not more than $50 per acre. The SSB approached Indian Affairs about the possibility of an adjustment in price. In 1923, the SSB and Indian Affairs finally agreed that the former should pay for only 139.9 acres, and $1088 was refunded. There is no evidence that the Band was consulted or even aware of these negotiations.

The SSB also became concerned that the land was unsuited to returning veterans who might be unaccustomed to agriculture and unprepared for the extensive clearing required to permit cultivation. The SSB faced further difficulties in conveying title arising from a dispute with the province of British Columbia regarding taxes on SSB lands. Indian Affairs was approached with the idea of taking the land back, but nothing came of this. Following the resolution of differences between Canada and the province by the McKenna-McBride Commission in 1924, the SSB eventually sold the lands between February 1927 and July 1930 to purchasers including non-veterans, at prices ranging from $74 to $139 per acre, with an average of $81 per acre.

On reviewing the evidence, the Commission concluded that the surrender complied with the technical requirements of the Indian Act. Therefore, the Band could not challenge the validity of the surrender, but might still be able to claim compensation if Canada breached fiduciary duties, if any, owed to the Band in the circumstances of this case. However, not every aspect of the Crown's fiduciary relationship with Indian bands will give rise to a specific fiduciary obligation.

Bands are autonomous actors whose decisions must be respected and honoured. This definition negates the contention that the Crown must act in a band's best interests unless the band has ceded its decision-making power to the Crown. Although Byrne's persistence in seeking the surrender warrants close scrutiny, there is insufficient evidence to indicate that the Sumas Band was pressured or that it ceded its decision-making power to the Crown in this case. Similarly, there is no evidence suggesting that Crown officials "tainted" the transaction in such a way that it would be unsafe to rely on the surrender as an expression of the Band's true understanding and intention. Moreover, although under section 49(4) of the 1906 Indian Act, the Crown is obliged to withhold its consent to a surrender that is foolish, improvident, or exploitative, the evidence again did not disclose that the surrender was any of these things.

Having regard for the fact that Indian Affairs undertook to negotiate on the Band's behalf, and in doing so did not consult the Band or inform it that the land might be worth more than $80 per acre, the Commission concluded that the Crown had a fiduciary duty to protect the Band's interests by taking reasonable steps to ensure that the Band received fair value for the land it was being asked to surrender. It is not clear that this duty was met. First, the Crown was arguably in a conflict of interest, since the SSB's mandate was to obtain land for returning soldiers at the lowest possible price. Second, Byrne was instructed to cooperate with Stacey, and it is not certain that he actively pursued a fair price. Third, it does not appear that Indian Affairs was even alert to its duty to the Band. Fourth, Byrne took no steps to obtain an independent valuation of the land. Fifth, Byrne failed to advise the Band that it might be able to obtain a price higher than $80 per acre. Finally, the Band was not given independent legal or expert advice. However, it is not clear that $80 per acre failed to represent fair value for the land. If it was fair value, the Band may not have suffered any damage. The Commission recommended that the parties undertake joint research on this issue, with the Band to receive compensation if a higher value is established.

The concepts of undue influence and duress are irrelevant in establishing the validity of a surrender under the Indian Act, although they may be considered in determining a breach of fiduciary obligation. However, there is no evidence that Canada applied undue influence or duress to obtain the surrender. As for the $4500 cash inducement, this practice was specifically permitted by statute, and the evidence does not indicate that it was used in any way to taint the process. Nor is it evident that the payment of the cash inducement fettered the Governor in Council's assessment of whether the surrender was foolish, improvident, or exploitative.

After the surrender, the Crown was not obliged to reacquire the land when it was offered by the SSB, since the conveyance of the land to the SSB was absolute and unconditional, not "inadvertent." Moreover, Indian Affairs did not breach any legislation, the terms of the surrender, or its fiduciary duty in acquiescing in the SSB's disposal of the land to persons other than returning veterans since the land was by then beyond the Department's control. The refund of $1088 was admittedly an unauthorized payment, and Canada has already agreed to negotiate this issue.

Response: In January 1998, Canada agreed to joint research to determine if evidence exists for a claim.

To download the government's response - PDF

To download the report - PDF