The Duty to Consult First Nations in Relation to the Incorporation of Municipalities

As noted in our client bulletin dated April 2012, respecting the BC Supreme Court decision in Neskonlith Indian Band v. Salmon Arm (City), although local governments may not have a duty to consult and accommodate First Nations that parallels that of the Crown, the Crown’s duty to consult and accommodate remains an important fact of life for local governments where local government concerns intersect with the exercise of provincial powers.  This is illustrated by the recent BC Court of Appeal decision in Adams Lake Indian Band v. Lieutenant Governor in Council.

This was an appeal from a decision of the Supreme Court rendered in March 2011.  The Adams Lake Indian Band (the “Band”) had sought a declaration that the Lieutenant Governor in Council failed to fulfill its constitutional duty to consult with and accommodate the Band in relation to the incorporation of the Sun Peaks Mountain Resort Municipality.  Although the Supreme Court rejected the Band’s application for an order setting aside or suspending the effect of the Order in Council authorizing letters patent incorporating the municipality, the Supreme Court did find that the Province had failed to properly consult with the Band, and ordered that further consultation be conducted.

On appeal, this decision was reversed.  The Court of Appeal held that in respect of the decision to incorporate the municipality, the Province had fulfilled its constitutional duty to consult with and accommodate the interests of the Band.

In 1993 the Province had entered into a master development agreement (the “MDA”) with Sun Peaks Mountain Resort Corporation, authorizing the development of recreational, residential and commercial development within the area, under the terms of a Master Plan developed by Sun Peaks. The term of that agreement extended to 2044.  The Court of Appeal observed that no consultation between the Province and the First Nations whose interests were affected had occurred during the drafting of the implementation of the MDA for the development, or the Master Plan. The area had seen significant development since the early 1990’s and deep seated grievances on the part of several First Nations bands had been festering for some time, given a perceived lack of respect for and accommodation of their claim to aboriginal title an drights over the Sun Peaks area.

Against that background, in 2003 local residents began exploring the possibility of incorporating as a municipality.  A governance committee was formed in 2005 to pursue the issue, and in 2006 the Province provided the committee with a grant to prepare a study into the merits of incorporation.  That study was completed in 2007, but the views of the local First Nations were not solicited.  Representatives of the Band were aware of the proposal for incorporation, and made it clear that they were opposed until meaningful consultation and accommodation regarding the proposed incorporation, and development of the Sun Peaks area generally having occurred.  In 2007, the Province initiated a consultation process, to be led by the Ministry of Tourism, and at the time it was proposed that consultation would cover a range of issues including the development of the resort, proposed amendments to the MDA, and the proposed change in authority over timber rights in the Sun Peaks area under the Resource Timber Administration Act.  A number of meetings were scheduled with local First Nations in an attempt to settle upon the framework for consultation, but more than a year elapsed without a consultation agreement having been concluded.  It is important to note that while the parties were unable to settle upon the terms of the consultation agreement, a number of meetings were held between representatives of the Province and First Nations including the Band, at which the issue of municipal incorporation, and the effect of incorporation, were discussed.  In the spring of 2009, provincial officials wrote to the Band and other of the First Nations involved, confirming the state of consultation to date, and First Nations concerns about the impact of development on aboriginal rights and title, the impact of development on traditional and sacred use sites, and the provisions of the MDA.  In that letter, the Province took the position that the provisions of the MDA lay outside the scope of the incorporation process, given that the terms of the MDA would continue to govern the municipality, and that the bands’ concerns would be better addressed in the process of consultation concerning the proposed amendments to the MDA.  The response of the First Nations was that all issues should be dealt with together, and that incorporation should be delayed until all consultation issues had been resolved.  In response, the Province took the position that consultation on the incorporation process itself was complete.  In response to the specific concerns of the Band and other First Nations regarding incorporation of the municipality, the Province proposed the creation of an advisory committee that would include First Nations representatives to advise the new council on land matters.

In January 2010, a majority of voters who participated in a referendum voted for incorporation, and on March 25, 2010 an Order in Council was issued authorizing Letters Patent for the municipality.

The Supreme Court Justice hearing the petition was of the view that consultation in relation to the incorporation of the municipality could not be separated from consultation concerning other issues such as the MDA and the proposed transfer of timber administration.  On this point, the Court of Appeal disagreed.  In particular, the Court of Appeal noted the comments of the Supreme Court of Canada in Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council, that the Crown’s duty to consult concerns the “specific Crown proposal at issue” and not the “larger adverse impacts of the project of which it is a part”.  The Court of Appeal also noted that the Band’s petition included no specific complaints about the adequacy of ongoing consultation with respect to the broader issue of the MDA or the transfer of timber administration, but focused squarely on the question of the incorporation of the municipality.  Thus, the issue of consultation on those broader issues, which had been a deciding factor in the Supreme Court judgment, had not been properly placed before the Court. The Court held that the Chambers Judge erred by failing to confine the duty to consult analysis to the incorporation issue on its own.  The Court of Appeal was of the view that the decision to incorporate the municipality amounted to the substitution of one form of local government for another – the former Sun Peaks Mountain Resort Improvement District, which had jurisdiction for a limited number of services, was dissolved at the same time that the municipality was incorporated, and its assets and responsibility for those services transferred to the new municipal incorporation; the Order in Council also removed the municipal area from the Thompson Nicola Regional District and transferred the Regional District’s assets to the new municipality.

As to the adequacy of consultation, the Court held that given the limited impact of the decision on the interests of the Band, the consultation engaged in by the Province had been adequate.  Information about the structure of the intended municipality and the legal effects of incorporation had been provided, and the Band had been given a sufficient opportunity to respond.  Additionally, the establishment of a First Nations advisory committee constituted a reasonable accommodation of the Band’s concerns.

Although one might sympathize with the Band over what appears to be a longstanding concern about a lack of consultation over development in the area, the Court of Appeal’s decision does make sense given the particular facts of the case.  It is of particular note that the terms of incorporation required the new municipality to exercise its jurisdiction in a manner was consistent with the MDA.  To the extent that the future development of the area was already governed by the MDA, incorporating the area as a municipality would not likely have any further negative impact on First Nations’ rights.  One issue that had arisen in the court below concerned the municipality’s adoption of a bylaw restricting the use of firearms, which the court below concluded had a direct and immediate impact on the Band’s aboriginal right to hunt within the area.  The bylaw had since been repealed, but even so, the Court of Appeal noted the municipality’s apparent willingness to exempt band members from the bylaw and the further possibility that band members could seek a constitutional exemption if the municipality sought to enforce such a bylaw against them.  In the Court’s view, incorporation was an issue that fell at the low end of the spectrum of consultation and the impact of incorporation on the Band’s interests was difficult to discern.

The case may set a precedent that will guide the Province’s response to requests for consultation in respect of similar decisions, such as municipal boundary expansion requests.  At the same time, the case highlights the fact that the Crown’s duty to consult is limited to the specific Crown decision that is in issue – First Nations cannot exercise a veto over Crown decisions by attempting to load the consultation agenda with issues and concerns that do not bear upon the decision at hand.