BEST MANAGEMENT PRACTICES FOR LAND CODE LEASES Hosted by Seabird Island Band LEGAL ISSUES Murray Browne Woodward & Co. LLP June 4, 2014 1
KEY LEGAL ISSUES FOR FNLM LEASES 1. Minimize the Big 3 Potential Liabilities (a) as a fiduciary, (b) as a regulator and operator, (c) as a developer or participant. 2
Summary of Best Practices 2. Summary of Best Practices a) Follow Land Code, IA and your own Land Use Plan and Laws b) Develop and follow laws and policies c) Try to get Buckshee leases converted to real leases d) Check and update insurance e) Keep members informed and always act in their best interests f) Remember that the Band is not exempt from following your own laws and policies g) Get legal advice 3
GROUP EXERCISE Who is most likely to sue a Land Code First Nation? List the top three individuals or types of individuals you think are most likely to sue. 1. 2. 3. 4
The Big Three Potential Liabilities (a) As a Fiduciary Guerin is the classic case Recent passing of Delbert Guerin In 1956 surrendered 400 acres of prime land and INAC met with members to discuss terms for a lease of 162 acres to Shaughnessy Golf Club INAC did not ensure a lawyer or appraisal for Musqueam and negotiated a deal for far less than market value 5
Big Three Liabilities : Fiduciary Fiduciary (Continued) Guerin, Supreme Court of Canada: Where by statute, by agreement or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary. Equity will then supervise the relationship by holding him to the fiduciary's strict standard of conduct. 6
Big Three Liabilities : Fiduciary Fiduciary (Continued) We usually only think of federal govt fiduciary duties but they apply to govt. Unilateral authority by statute or agreement + Discretionary power to impact others = Fiduciary High standard and high liability potential 7
Big Three Liabilities : Fiduciary Fiduciary (Continued) Apply the formula to FNLM Leases: Is there a unilateral authority by statute or agreement? Land Code is a legal agreement voted on by members which gives Council authority to make decisions about Reserve land Individual Agreement transfers full legal authority from AANDC to the First Nation Is there a Discretionary power to impact others? Land Code gives Council authority to make decisions about lands and resources on Reserve Council could grant a lease or resource permit for less than market value the same way AANDC did in the Guerin case High standard and high liability potential: Guerin cost AANDC $10 million in damages plus tens of millions in legal costs 8
Big Three Liabilities : Regulatory (b) As a Regulator and Operator: First Nations under Land Code are also potentially liable for failure to regulate There are many municipal and provincial examples which may be relevant. For example, building inspection and road repair cases. 9
Big Three Liabilities : Regulatory Building Inspection Liability: Building inspectors and municipalities owe a duty of care to the owners and users of a building. The standard of care includes omissions as well as actions. A municipality cannot avoid liability simply by refusing to inspect. The municipality is responsible for ensuring that a building meets building code requirements for the sake of quality and safety. This duty of care has been clearly articulated by the courts. (Blaney McMurtry LLP, http://www.blaney.com/sites/default/files/article_building-construction.pdf) 10
Big Three Liabilities : Regulatory Repair and Maintenance Liability: We all understand that First Nations do not receive enough funding to keep roads, buildings, water systems etc. in proper repair. However, under Land Code, First Nations become responsible and potentially legally liable for many issues. 11
Big Three Liabilities : Regulatory Repair and Maintenance Liability (cont.): There are many examples of municipalities being successfully sued for potholes in roads, unsafe sidewalks, unsafe structures, etc. The SCC stated in Kamloops v. Nielsen: The exercise of the statutory discretion granted to the city to inspect was a policy decision. A plaintiff cannot sue government for a policy decision; however, once the city elected to inspect, the enforcement of that inspection was an operational decision which could give rise to a duty of care. (emphasis added) 12
Big Three Liabilities : Regulatory How do you know if it s policy or operational? Get legal advice. Whether or not a decision is characterized as a policy decision or as an operational decision rests on the nature of the decision and not on the identity of the actors. Generally, decisions concerning budgetary allotments for departments or government agencies should be classified as policy decisions. A policy decision may be open to challenge on the basis that it is not made in the bona fide exercise of discretion. (Just v. B.C., 1989] 2 SCR 1228 emphasis added) 13
Big Three Liabilities : Developer/ Participant (c) As a Developer or Participant A First Nation under Land Code can face major liability as a developer or participant in a project. For example, the Band may build or contract for housing, playgrounds, community buildings etc. If the Band tries to speed up the process by avoiding their own development application process, not getting building inspections, etc., there can be major liability. 14
Big Three Liabilities : Developer (c) As a Developer/Participant (Cont.) A First Nation carrying out its own project might also be tempted to skimp on Environmental Assessments and other requirements. First Nations can be sued or the federal government can impose penalties of over $1 million for failure to meet environment and other requirements. 15
Big Three Liabilities : Developer (c) As a Developer/Participant (Cont.) First Nations can also be on the hook for millions of dollars in environmental clean-up costs. 16
The Big 3: Minimizing Liabilities Some Keys to minimizing liabilities: 1. Follow your Land Code and Individual Agreement and keep checking to make sure. 2. Develop and follow laws and policies: (a) Develop a law or policy for building inspections; This could be included in a Development or Zoning Law; (b)use Checklists 3. Get legal advice: (a) Ensure compliance with all relevant laws and policies; (b)build in indemnities and other protections. 17
The Big 3: Minimizing Liabilities 4. Be very careful to distinguish between policy and operational decisions. 5. Make sure your insurance is up to date and includes Land Code decisions, building inspections, etc. 6. Ensure that Land Code, Environmental, Building Inspection and other requirements are written into all relevant leases and permits. 18
The Big 3: Minimizing Liabilities 7. Consider contracting out Building Inspection to a municipality or independent, fully insured inspectors. 8. Remember that the lands and resources on-reserve are community assets. (a)inform members about key decisions and ask for their input; (b)develop and follow laws and policies (include appraisals, conflict of interest, and other measures to act in the best interests of the community). 19
Developing Leases Under the Indian Act, zoning, land use planning, archaeological, environmental, building codes, etc. were usually loaded into the lease. Under Land Code, First Nations can deal with these issues through laws. Always start with Land Code, Land Use Plan, Zoning Laws, Servicing Agreements, etc. 20
Developing Leases (Cont.) If the proposed use for the lease does not meet Land Code, Land Use Plan, zoning or other requirements, deal with these issues up-front. Always check the lease requirements in your Land Code and keep re-checking. Don t forget Enviro Assessments, Arch Overviews, and other necessary studies. Review and incorporate checklists and procedures from AANDC and from other First Nations. 21
Developing Leases (Cont.) Build the checklists and procedures into your laws and make sure they are diligently followed. Encourage people to use proven lease templates but make sure they have been modified for Land Code. Try to get Buckshee leases converted to registered leases. Get legal advice. 22
Developing Leases (cont.) Checklists and procedures from AANDC and from the Law Society of B.C. were developed were developed over many years and after many lawsuits. AANDC Locatee Lease Policy and Directive: http://www.aadncaandc.gc.ca/eng/1374091139187/1374 091182369 23
Thank You! Questions or Comments? Murray Browne Murray@mblc.ca 24