Article body

Water is the source of life. It was the original cradle of life on earth and remains life’s fundamental necessity. As Québec’s recently adopted legislation so aptly puts it, water is “of vital interest[1]”. Views of our planet from space are reassuring, but closer inspection puts the lie to the myth of abundance of water. Deserts are growing, and rivers are drying. Even Canada is not immune. A leading Canadian water scientist, John Sprague, stresses the importance of distinguishing between volume of water and renewable supply when evaluating water availability[2] ; he notes that while Canada’s overall volume of water is large, its renewable supply is relatively limited, on par with that of the United States (6.5 percent and 6.4 percent of the world’s supply, respectively). Moreover, much of Canada’s renewable water flows north, and southern Canada — where most people live and work — has only 2.6 percent of the world’s renewable supply, placing it between India and the Democratic Republic of the Congo and far below the United States in relative abundance[3].

The protection of water resources is thus an important issue across Canada, and the Québec government has taken a lead in this regard with the recent adoption of the Act to Affirm the Collective Nature of Water Resources and Provide for Increased Water Resource Protection[4]. As the title suggests, the Act takes as it starting point the private law’s position that water is a collective resource. Section 1 of the Act affirms the basic civil law principle, found in article 913 of the Civil Code of Québec[5], that water in situ (both surface and underground) is, by its nature, a res communis (or common thing) which is not owned by anyone but is available to all to use ; as such, it is “part of the common heritage of the Québec nation[6]”. The preamble to the Act stresses that the State, “as custodian of the interests of the nation in water resources”, must be vested with the necessary powers to protect and manage those resources “to meet the needs of present and future generations”.

As in Québec, water management regimes must take into consideration private law rules relating to water in situ if they are to be successful, and the purpose of this article is to examine the legal regime applicable to water in situ in the other Canadian provinces, whose private law traditions are English rather than French. Do the common law provinces have functional equivalents to Québec’s private law notion of res communis and its statutory notion of State “custodianship” ? In attempting to answer this question, we will look first at the question of Crown (or State) ownership of water in situ and then at possible limits to such Crown ownership.

1 Crown ownership

Crown ownership of water in situ is expressly recognized by statute in the western Canadian provinces. For example, the present Water Act of Alberta stipulates that “[t]he property in and the right to the diversion and use of all water in the Province is vested in Her Majesty in right of Alberta” and the Water Rights Act of Manitoba is substantially to the same effect[7] ; the Saskatchewan Watershed Authority Act goes one step further in recognizing that all surface and ground water “is, and is deemed always to have been, vested in the Crown[8]”. These provisions can be traced back to legislation adopted by the federal government in the 1890s (i.e. prior to the 1905 creation of Saskatchewan and Alberta and enlargement of Manitoba) as part of its campaign to open the west to settlement. The North-West Irrigation Act was first adopted in 1894, but the specific reference to Crown ownership was added retroactively the following year as the original Act mentioned only the vesting of a right of use in the Crown[9]. The North-West Irrigation Act continued in force until ownership and control of public land and natural resources were transferred from the federal government to the three provinces in 1930[10] and the provisions of the federal Act were re-enacted as provincial law. As originally adopted, the Crown ownership provisions applied only to surface water ; they were not extended to include groundwater until 1959 in Manitoba, 1961 in Saskatchewan, and 1962 in Alberta[11]. As for British Columbia, although the colony had adopted legislation providing for Crown control of the use of water as early as 1892[12], it did not provide for Crown ownership of surface water until 1925[13] and did not recognize it as extending to underground water until 1995 (in terms recalling Saskatchewan’s legislation) : “ The property in and the right to the use, percolation and any flow of ground water, wherever ground water is found in British Columbia, are for all purposes vested in the Crown in right of British Columbia and are conclusively deemed to have always been vested in the Crown in right of British Columbia [14].”

However, Crown ownership seems to have been added to the statutes of the western provinces for purely instrumental reasons, as a management tool to complement a statutory permit system of requiring government approval for water withdrawals over a statutory minimum[15]. A leading western Canadian water law scholar, David Percy, describes Crown ownership as “a cornerstone of the legislation, in order to secure control over water use[16]”, and this seems to be reflected in the purpose sections of some present provincial legislation[17]. This suggests that statutory Crown ownership in the western provinces resembles the Québec requirement that the State, “as custodian of the interests of the nation in water resources”, be vested with the necessarypowers to preserve and manage those resources[18]. It is what one American author, writing about the public trust, labels “‘sovereign capacity’ ownership[19]”.

Nevertheless, the statutory rules in the western provinces cannot be considered in isolation from the private law principles that underpin them. And these principles also apply in the eastern common law provinces, where the question of ownership of water in situ is not dealt with explicitly by statute[20].

The starting point is to recognize that the common law does not regard water in situ as being capable of private ownership. As Halsbury’s Laws of England puts it :

Although certain rights as regards flowing water are incident to the ownership of riparian property, the water itself, whether flowing in a known and defined channel or percolating through the soil, is not, at common law, the subject of property or capable of being granted to anybody. Flowing water is only of public right in the sense that it is public or common to all who have a right of access to it[21].

The common law focus is thus on private rights of access to (i.e. use of) water, which are described as “natural rights” or “natural incidents” because they exist automatically as part of the normal rights associated with the ownership of land if its geographic situation supports it[22]. Briefly put, the common law rules of access to surface water (i.e. water flowing through a defined channel) try to strike a rough balance between the upstream and downstream riparian owners by recognizing to the lower riparian owner a right to the natural flow of water undiminished in quantity or quality, subject to “ordinary and reasonable use” by the upper riparian owner for purposes connected to the riparian property. On the other hand, rights of access to underground water (i.e. percolating water) are much more absolute at common law : all landholders have the right to withdraw as much water as they like, for whatever purpose they wish[23], without regard to the effect this withdrawal might have on neighbouring landholders (e.g. loss of water, subsidence)[24].

The common law thus rejects the notion of private ownership of water in situ. However, it seems to accept the principle of Crown ownership (even absent a specific statutory provision to this effect) almost by default. The Supreme Court of Canada in British Columbia v. Canadian Forest ­Products Ltd. describes it as being “by legal convention[25]”, and most common law lawyers would instinctively agree. But the basis for this convention is not entirely clear. The Supreme Court supports its position by reference to the historical influence of natural law, and quotes an extract from the 13th century author Henry de Bracton :

[It is the lord king] himself who has ordinary jurisdiction and power over all who are within his realm […] He also has, in preference to all others in his realm, privileges by virtue of the jus gentium [By the jus gentium] things are his […] which by natural law ought to be common to all […] Those concerned with jurisdiction and the peace […] belong to no one save the crown alone and the royal dignity, nor can they be separated from the crown, since they constitute the crown[26].

The things referred to by Bracton — those things which “by natural law ought to be common to all” — include “running water” as well as air, the sea and the shores of the sea[27]. But a leading Oxford legal historian, Joshua Getzler, casts doubt on the extent to which Bracton’s treatise accurately reflects English law of the period[28], and others suggest that from Saxon times up to the reign of Charles I — thus, even at the time of Bracton — much of the foreshore of England was in fact privately owned[29].

Other possible bases for the legal convention of Crown ownership are more instinctive than historical. One is the idea that all things must be owned by someone, and since water in situ is not susceptible to private ownership, it must be owned by the Crown : “the common law introduced into [the Justinian notion of the common nature of running water, the air, the sea and the shores of the sea] a concept less important in Roman times : ownership. The common law abhorred ownerless things. It was held, therefore, that the ownership of beds of navigable waters was in the King[30].” This conclusion is reinforced by a second instinctive notion grounded in the historical feudal underpinning of the common law of property which regards the Crown as ultimate owner of all real property, granted as well as ungranted. This was said to be the basis for Crown ownership of the foreshore : “the King […] in addition to this merely public function [safeguarding public rights of navigation and fishing] he possessed in his own right, as the general residuary owner of all the soil in England, the jus privatum, or title to the soil of the foreshore, which conferred upon him the right either to alienate or to use this property in any way not incompatible with the jus publicum[31]”.

This analysis leads to a conclusion of State ownership (express or implied) of water in situ in the common law provinces. But what sort of ownership is it ? Is it full and absolute ownership entitling the Crown to do what it wants with the water ? Or is it ownership subject to some sort of limitation or restriction, and thus close to the notion of custodianship under Québec’s new water law ?

2 Limits to Crown ownership

Because of the fundamental importance of water to life, it is inconceivable that Crown ownership of water in situ is full and absolute, giving the Crown the right to do with the water whatever it wants. Rather, it must be limited ownership, with the limitations arguably coming from the principles governing trusts, especially the elusive American-style public trust, and those governing fiduciary relationships in general.

2.1 Public trusts

Canadian lawyers are much attracted to the public trust as a vehicle to redress environmental harms. However, a concise definition of it is hard to find as it seems to be, as one author puts it, “chameleon-like, its character depending on the context of the dispute at hand[32]”. At its most basic, it represents the idea that the government holds some of its natural resources — notably those “for which substitutes cannot be made by man” — in trust for the public[33]. The public trust applied traditionally to Crown ownership of the beds of navigable waterways and the foreshore, which the doctrine held could not be dealt with in a way detrimental to their public use for purposes of commerce, navigation and fishing. It has been extended more recently to encompass other resources, including surface and groundwater[34] as well as public lands, municipal infrastructure, archaeological remains, cemeteries, wildlife and so on[35].

The public trust doctrine is said to be derived from Roman law as set out in the Institutes of Justinian which, as we have seen, provides for common ownership of some resources (“And indeed, all of these things are by natural law common to all : air, flowing water, the sea and, consequently, the shores of the sea[36]”), and to have made its way from Roman law into the English common law in near-identical terms through the writings of Bracton[37]. The concept of a public trust first appeared in American cases in the early 19th century[38], and was given modern impetus by the publication of Sax’s 1970 seminal article[39], which inspired much academic debate and judicial consideration.

The concept of a public trust has been invoked more tentatively in Canada. It was referred to in some early cases, notably R. v. Robertson[40], an 1882 decision of the Supreme Court of Canada in which Strong J. mentioned the existence of New York cases recognizing that the beds of large navigable inland waterways “are, by the common law, vested in the State as a trustee for the public, and are inalienable without legislative authority”, but said that this “important question” had not been raised for adjudication in Roberston[41]. Other Canadian cases mentioning a public trust include Green v. Ontario[42], R. v. Mann[43] and Walpole Island First Nation v. Canada[44], and an established line of cases recognizes that municipalities hold title to streets in trust for the public[45]. As well, some pioneer writings explored the possibility of a public trust in Canada[46]. Then came the 2004 decision of the Supreme Court of Canada in Canadian Forest Products[47], an action by British Columbia for damages for the loss of trees on Crown land resulting from a forest fire caused by the defendant’s negligence. Both the majority and the minority of the Court accepted the right of the Crown, in appropriate cases, to sue as parens patriae in damages for harm to the environment. Binnie J., speaking for the majority, supported this conclusion with references to Justinian and Bracton and to the American public trust[48]. Although these remarks are obiter (as the majority felt this was not an appropriate case in which to sanction environmental loss as the issue had not been fully argued in the courts below), Canadian Forest Products, like Sax’s article, has been a catalyst for a more sustained Canadian interest in the public trust. It has been widely commented upon[49] and quoted with approval in several cases, notably by the trial judge in Prince Edward Island v. Canada (Minister of Fisheries and Oceans)[50].

The nature of an American-style public trust is not clear. At first blush it appears to be a property-based institution[51], and the evocative word “trust” implies the existence of twinned proprietary interests, one belonging to the State and the other to the public : the State’s interest consists of the management obligation (or burden) and the public’s interest represents the benefit[52]. However, this suggests a need to look more closely at the historical development of the public trust, to see to what extent it supports the concept of twinned proprietary interests implicit in a trust. A closer look is necessary because, as one author put it, “a great deal of Roman and medieval law and history lurks there [i.e. in the public trust doctrine] […] and not always in a form recognizable to one interested in ‘pure’ scholarly history. The courts have developed and erratically applied what is really a counter-history, a purely judicial history of the public’s interest in the coastal area[53].”

Five areas need particular attention. One is the distinction between res communes (common things) and res publicae (public things), a distinction made by Justinian[54] but one which has become blurred in the modern discussion of the public trust. A second area needing attention is the basic distinction between property belonging to the sovereign in a personal capacity (the privy purse) and property belonging to the sovereign as head of state (the public purse), a distinction that came slowly to Roman law and very late to the common law[55]. Patrick Deveney calls an acceptance of this distinction “the basis for any real public trust[56]”. A third is the distinction between (public) property held in full ownership and property held on trust. This distinction did not exist in Roman law and evolved only gradually over the 13th to 16th centuries in England[57], later than the period in which the public trust is usually said to have originated. A fourth area for study is the distinction between alienable and inalienable public property. Inalienability is not a necessary component of a trust, and trustees often have a power of sale over the individual assets in a trust, but some authors stress the inalienable nature of property subject to a public trust[58]. However, English and Canadian common law clearly accepts that the beds of navigable waters (the prototypical public trust asset) can be alienated by the Crown, and that this usually results in the right to fish being privatized but the right of navigation remaining public[59]. A final area needing attention is the distinction between public property and public rights. What is the nature of the trust asset being held on behalf of the public ? Is it property, or is it rights ? Of course, the two concepts, are interrelated, even interchangeable, in the sense that some rights, such as a right of navigation, might in some circumstances also be a proprietary interest (i.e. an easement), but might in other circumstance be something less (i.e. a mere license or permission). However, the various discussions of the public trust do not seem to distinguish particularly between these two concepts, and a closer analysis of the nature of the trust asset might be helpful.

In sum, one American author describes the public trust as a “legal fiction[60]”, one which has outgrown its initial usefulness as it has been replaced by developments in other areas of the law[61]. But the “public trust” is a concept that resonates strongly. As another author puts it, in relation to water :

The public trust, as it is applied to the appropriation of water, is based on a set of modest beliefs : a belief that the public benefits mightily from private development, but that the public interest is in fact greater than the sum of the private interests ; a belief that property ownership must be profoundly respected but that property rights in water, like rights in land, are not absolute but rather can be regulated and adjusted in reasonable ways for the good of the citizenry as a whole ; a belief that wasteful uses of public resources are wrong and are not excused by return flows that return to our rivers not just water but also silt, salts, agrichemicals, and temperature changes ; a belief that our rivers and canyons are more than commodities, that they have a trace of the sacred ; a belief that words like “trust” ought to be taken seriously[62].

Perhaps, therefore, Canadian courts should simply adopt, or adapt, the public trust as a sui generis concept developed by the courts of a sister jurisdiction, without looking too closely at its historical origins[63]. Or they might consider whether classical Canadian trust and fiduciary law provides a similar sort of protection[64].

2.2 Classical trusts

Modern Canadian trust law recognizes two types of trusts[65]. One is a trust for persons and the other, a trust for purposes. Each is subject to the same basic requirements : a substantive requirement that the content of the trust respect the “three certainties”, and a procedural requirement that the trust be properly constituted. These requirements are interrelated.

2.2.1 Certainty

The substantive “three certainties” are certainty of intention, subject matter and objects, and their application to ownership of water in situ is not without difficulty. The first two certainties, intention and subject matter, apply in much the same way to trusts for persons or purposes. The first certainty, that of “certainty of intention”, requires that the persons setting up the trust (the settlors) clearly intend that the persons holding the property hold it for the benefit of the persons or purposes indicated, and not simply for their own benefit. This requirement is interrelated with the basic procedural requirement that a trust be properly constituted, discussed below[66].

The second certainty, that of “certainty of subject matter”, in principle ought not to cause much difficulty in regard to water in situ. It has two aspects, a collective certainty as to the property subject to the trust and an individual certainty as to the amount each beneficiary is to receive. The first aspect requires that the property be described in such a way that it is ascertained or ascertainable. If the property is the surface and underground water located in a province, it is presumably something that is either ascertained or capable of ascertainment by qualified hydrologists. However, there is some ambiguity in the public trust literature about the nature of the asset held on trust, as noted above[67]. Is it the property itself, or is it a more limited right over the property such as an easement ? Although classical trust law recognizes that any sort of property — including intangible property such as rights — can be held in trust, the requirement of certainty of subject matter reinforces the need, identified above, for more clarity about this issue. As for the second aspect, that of certainty of each beneficiary’s share, this can be satisfied either by having a method by which shares to water are to be determined (e.g. the common law property-based rules for access to water[68]), or by giving the trustee discretion to decide the share (e.g. statutory water withdrawal standards), or under a basic fall-back presumption of equality.

The third certainty, that of “certainty of objects”, requires that the beneficiaries of the trust be defined with enough certainty that the trustees are able to administer the trust and the courts to enforce it. This is seen as an important stumbling block to the application of classical trust law to the public trust situation[69]. Trust objects may be either persons or, more occasionally, purposes, and the certainty of objects requirement is applied differently to each.

2.2.1.1 Trusts for persons

Most classical trusts are trusts for persons, and this initially appears to be the case for trusts of water in situ as the trusts are diversely described as being for the benefit of “all”, “the people”, “the public”, or another similar term[70]. The test for certainty of objects for person trusts differs for fixed and discretionary trusts. A fixed trust is one in which the beneficial interests have been specified in the trust instrument, and the trustees have no discretion as to choice of beneficiary or amount of benefit. This means that to implement the trust, the trustees must be able to identify each and every beneficiary, and for this reason, the test of certainty of objects for fixed trusts is a “complete list” (or “class ascertainability”) test. However, where the trusts are discretionary — that is, where the trustees have discretion to choose which beneficiaries in a designated class will receive anything from the trust, how much each will receive, and when — the trustees do not have be able to identify all member of the class before choosing ; rather, they just have to ascertain that the chosen beneficiaries are members of the designated class. For this reason, the test for certainty of objects for discretionary trusts is a less-demanding “is or is not” (or “individual ascertainability”) test[71].

A trust of water in situ probably has both fixed and discretionary elements. It would be fixed as to basic needs (health and sanitation), and it seems likely that the government has enough personal data (e.g. social insurance numbers, census data and so on) to satisfy the complete list test in a way to ensure widespread and equitable distribution of this vital resource. It would probably be regarded as discretionary in regard to additional uses (e.g. agricultural, manufacturing, industrial, etc.), where the government must establish priorities amongst classes of users, but then has only to consider whether a particular permit applicant “is or is not” a member of the class in question.

2.2.1.2 Trusts for purposes

Trusts of water in situ may perhaps be seen as trusts for purposes (e.g. the purpose of providing open and equitable access to water) rather than as trusts to benefit persons directly. In this case, different considerations about certainty of objects apply. Although purpose trusts are generally regarded as invalid because a purpose does not have standing to bring an action to enforce it, an important exception to this rule is made for trusts for public purposes (i.e. charitable trusts)[72]. The only required certainty is that the purpose be public (charitable) ; once this basic threshold is crossed, further specificity about the purpose is unnecessary[73]. The public nature of the purpose means that the Attorney General acting for the Crown as parens patriae has standing to enforce the trust, thus overcoming the principle obstacle to the recognition of purpose trusts generally.

A public, or charitable, purpose trust requires “an exclusive dedication of property to a charitable purpose in a way that provides a public benefit[74]”. The first question, therefore, is whether the purpose of the trust is charitable, and a long line of cases categorizes charitable purposes under the four heads of : relief of poverty, advancement of religion, advancement of education, and “other purposes beneficial to the community[75]”. The second question is whether there is the requisite public benefit, as proof of public benefit rather than private advantage is essential for a public purpose trust. Public benefit is presumed (although it can be rebutted) in regard to the first three charitable areas – religion, education and poverty — but must be proved in regard to the residual fourth category, “other purposes beneficial to the community”. This is done both by arguing by analogy from recognized cases and by demonstrating a “benefit of the community or of an appreciably important class of the community”. The third question is whether the trust assets are dedicated exclusively to a charitable purpose.

Open and equitable access to water in situ would seem to be a particularly compelling example of a purpose “beneficial to the community”. Access to water is more than beneficial : it is necessary, not just for humans but also for all living things. A purpose trust suggests taking a more ecocentric approach to water needs, not just an anthropocentric one as might be implied by a persons trust. And the exclusive dedication requirement stresses that all water must be dedicated to the public purpose, so that commercialization of any part of it — and the private advantage this entails — would not be permitted. However, parens patriae enforcement raises practical difficulties in the context, as the Crown would be both plaintiff and defendant ; public interest intervention might provide a partial solution[76].

2.2.2 Constitution

The second basic requirement for a valid trust is the procedural requirement that the trust be properly constituted. Mere intention to create a trust is not enough ; title to trust property must be vested in the trustee to be held in trust for the designated objects (persons or purposes). How is a trust of water in situ set up, or constituted ? Most trusts are constituted by the transfer of the asset from a settlor to a trustee, although they can also be created by declaration of trust or by operation of law. The first method, a transfer from settlor to trustee, is difficult to envisage for water in situ : if the Crown is the trustee, who is the settlor ? A declaration of trust by the Crown that it holds the water on trust seems more possible. For example, the statutory declarations of Crown ownership of water in situ in the western provinces could be read as declarations of trust, and the question would be whether the statutory provisions (and perhaps surrounding documentation) are sufficiently explicit in this regard to satisfy the certainty of intention requirement[77]. However, this implies that without a sufficiently clear declaration of trust, Crown ownership is absolute, which we have suggested is an untenable conclusion. The second possible method for constituting a trust to water in situ, that of operation of law, seems inherently satisfying in light of the historical references to natural law and the jus gentium[78], but how would classical Canadian trust law treat this method ?

The most important type of trust arising by law is the “constructive trust”, and common law Canada recognizes two sorts : an “institutional” constructive trust (as in England) and a “remedial” constructive trust (as in the United States). The latter has attracted much attention in Canada as a remedy for unjust enrichment, with the Supreme Court of Canada playing a leading role in its development. Unjust enrichment is said to lie “at the heart of the constructive trust”, and to have as its constituent elements “an enrichment, a corresponding deprivation and absence of any juristic reason for the enrichment[79]”. The Supreme Court is said to take a “straightforward economic approach[80]” to the first two requirements, and to see enrichment as a tangible benefit conferred on the defendant by the plaintiff and detriment as comprising lost opportunity[81]. The third requirement — absence of juristic reason for the enrichment — is the most difficult to assess. It is at this stage that the courts consider the fairness or justness of the enrichment, which the Supreme Court has recently suggested involves assessing two factors, “the reasonable expectations of the parties and public policy considerations[82]”. These requirements appear especially applicable to situations in which the State seeks to profit from its ownership of water in situ (by selling it in bulk, for example, or by permitting extensive use of it in resource extraction activities which generate royalties for the State). The State’s coffers are enriched (although it is difficult to envisage this benefit as flowing from the public to the State) ; the public’s supply of water is diminished or polluted ; and there does not appear to be any juristic reason, any legal justification, for this enrichment, as it neither reflects the reasonable expectations of the parties (since Crown ownership is merely intended to buttress the regulatory mechanisms) nor accords with public policy expectations (as commercialization of water in this way risks depriving the public and the environment of this vital resource).

The institutional constructive trust, on the other hand, has been largely ignored in Canada for several decades, but its continued importance was reaffirmed by the Supreme Court of Canada in 1997 :

The appeal thus presents two different views of the function and ambit of the constructive trust. One view sees the constructive trust exclusively as a remedy for clearly established loss. On this view, a constructive trust can arise only where there has been “enrichment” of the defendant and corresponding “deprivation” of the plaintiff. The other view, while not denying that the constructive trust may appropriately apply to prevent unjust enrichment, does not confine it to that role. On this view, the constructive trust may apply absent an established loss to condemn a wrongful act and maintain the integrity of the relationships of trust which underlie many of our industries and institutions.

It is my view that the second, broader approach to constructive trust should prevail. This approach best accords with the history of the doctrine of the constructive trust […] and the purposes which the constructive trust serves in our legal system[83].

The idea of a constructive trust arising by operation of law to “maintain the integrity of the relationship of trust” underlying the public’s acceptance of government management of water in situ and the possibility this gives the public to “condemn a wrongful act” in this management comes close to the American notion of a public trust and the Québec idea of custodianship. Moreover, the case for the imposition of an institutional constructive trust is strongest when there has been a breach of fiduciary duties, and several Canadian authors have emphasized the fiduciary role of the Crown when writing of the public trust[84].

2.3 Fiduciary duties

There has been an explosion of case law and academic commentary about fiduciaries and fiduciary duties in common law Canada over the last twenty-five years, and it is difficult to come up with a succinct description of what a fiduciary relationship is and the fiduciary duties arising from it[85]. At the risk of over-simplification, a fiduciary duty is a duty of loyalty owed by one to another, a duty to act solely in the other’s interest and not in one’s own interest. The strength and importance of such a duty was emphasized by the Supreme Court of Canada in Guerin v. R., which deals with the obligations of the Crown in regard to Indian lands and held that :

the nature of Indian title and the framework of the statutory scheme for [its disposition placed] upon the Crown an equitable obligation, enforceable by the courts, to deal with the land for the benefit of the Indians […] This obligation does not amount to a trust in the private law sense. It is rather a fiduciary duty. If, however, the Crown breaches this fiduciary duty it will be liable to the Indians in the same way and to the same extent as if such a trust were in effect[86].

The Supreme Court describes fiduciary relationships as possessing three general characteristics :

  1. The fiduciary has scope for the exercise of some discretion or power.

  2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.

  3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power[87].

These indicia capture well the situation of Crown ownership of water in situ : the Crown has a good deal of discretionary power over access to water ; the manner in which this power is exercised certainly affects people ; and the people are in a peculiarly vulnerable position, given the necessity of water to them. These indicia are regularly cited with approval, but they are very wide and could apply to many, if not most, government activities.

The extent to which governments can be held subject to fiduciary duties was raised by the Supreme Court in Guerin. Although it expressed caution about imposing fiduciary duties on the Crown, the Court nevertheless accepted the possibility of doing so in appropriate circumstances :

It should be noted that fiduciary duties generally arise only with regard to obligations originating in a private law context. Public law duties, the performance of which requires the exercise of discretion, do not typically give rise to a fiduciary relationship. As the “political trust” cases indicate, the Crown is not normally viewed as a fiduciary in the exercise of its legislative or administrative function. The mere fact, however, that it is the Crown which is obligated to act on the Indians’ behalf does not of itself remove the Crown’s obligation from the scope of the fiduciary principle[88].

But what is a “political trust” ? Here the word “trust” is not used in the proprietary sense of the twinned ownership institution recognized by equity but rather in the broader, generic sense of faith, confidence, reliance. In England, it is said to describe “the responsibility, the end, of government itself” and as such, to be “a political metaphor” : it is not an enforceable trust but rather only a “moral” one[89]. English courts are therefore reticent to recognize the Crown as being subject to fiduciary duties in the exercise of its governance obligations, and the reason for this is said to be the constitutional imperative of parliamentary sovereignty. However, Commonwealth scholars argue that different imperatives apply in countries such as Canada and Australia and that courts here should be more willing to hold the Crown subject to fiduciary duties[90].

The Crown’s fiduciary obligation in regard to aboriginal rights is firmly established in Canada, and there are now signs that the courts are willing to recognize that fiduciary obligations apply more widely. For example, in Canadian Forest Products, the Supreme Court raised the possibility of “enforceable fiduciary duties owed to the public by the Crown” in regard to the environment[91]. In Authorson v. Canada (Attorney General), a class action on behalf of disabled veterans, both the Superior Court and the Court of Appeal of Ontario held that the Crown was acting as a fiduciary in its administration of pensions on their behalf and had breached its duty to them by failing to invest the funds or pay interest ; this finding was accepted by the Crown before the Supreme Court of Canada, which ruled against the veterans on other grounds[92]. And in Elder Advocates of Alberta Society v. Alberta, a class action on behalf of residents of long term care facilities, the Alberta Court of Appeal accepted as arguable that the Crown was acting as a fiduciary to the residents and had breached its duty to them by the way in which it set their accommodation charge[93]. On the other hand, in Harris v. Canada., a class action on behalf of Canadian taxpayers, the Trial Division of the Federal Court held that the Crown was not acting in a fiduciary capacity towards taxpayers when issuing advance tax rulings favouring particular taxpayers (although both the Trial Division and the Federal Court of Appeal had earlier held this to be arguable in proceedings to have the pleadings struck for failure to disclose a cause of action)[94]. In so ruling, the Court stressed that fiduciary relationships are unlikely to exist “where that would place the Crown in a conflict between its responsibility to act in the public interest and the fiduciary’s duty of loyalty to its beneficiary[95]”. This approach has been applied in a number of cases since Harris[96], and it clearly restricts the type of situations in which a fiduciary duty will be found.

These cases suggest that the argument that the Crown is subject to fiduciary duties in regard to water in situ is not easy. One of the factors setting this situation apart from the exercise of most government regulatory functions is the Crown’s assumption of ownership of the water. Robert Flannigan’s explanation of the fiduciary relationship stresses the importance of access to property in deciding whether a fiduciary relationship exists. He states that the conventional function of fiduciary responsibility is to control “opportunism” (i.e. acting on one’s own behalf, not on behalf of the other) in “limited access arrangements” (i.e. access that is limited by an obligation to act on the other’s behalf) :

The physical arrangement that attracts fiduciary regulation is limited access or, in traditional terms, the undertaking to act wholly or partly in the interest of another. Those who are trusted for some defined purpose invariably acquire access to the assets (and opportunities) of their beneficiaries. The mischief associated with that access is that the value of the assets will be diverted or exploited for self-interested ends […] Where there is no access, on the other hand, there can be no opportunistic diversion. Similarly, if the access is open, rather than limited, consumption or exploitation does not amount to objectionable self-regard[97].

Guerin is a good example of a limited access arrangement, as the Crown has access (i.e. formal title) to reserve lands, but this access is limited, as the lands are to be dealt with only in the interest of the band. So too is Authorson, as the Crown has access to the pension moneys deposited in the Consolidated Revenue Fund, but this access is limited to using the moneys for the benefit of the disabled veterans. And the Court of Appeal in Elder Advocates suggested that the Crown’s access to the accommodation charges paid by residents of long term care facilities might also be similarly limited as the residents might retain an interest in any amounts paid in excess of the real costs of accommodation[98]. Applying this approach to water in situ, all provincial governments have “access” to the asset of water through their licensing powers, and this “access” is stronger when the licensing power is complemented by ownership rights. But in neither case is the access “open”, in the sense of being full and absolute, so that the government is therefore not entitled to exploit the water for self-interested ends (e.g. permitting the commercialization of water resources for purely budgetary reasons, particularly if this results in water being transferred out of an aquifer) or for the ends of a privileged minority (e.g. permitting the use of large quantities of water for the extraction of natural resources, such as bituminous tar or shale gas).

Conclusion

This article has looked at the legal regime applicable to water in situ in the common law provinces of Canada, with a view to seeing whether there are functional equivalents to Québec’s long-standing private law principle of res communis and its recently adopted statutory notion of State “custodianship” over water in its natural state. The first conclusion is that there is no direct functional equivalent to the notion of res communis, as the common law rejects the notion of private ownership of water in situ (recognizing instead a simple right of access to riparian and surface owners of land) but accepts, almost by default, the principle of Crown ownership. This acceptance is reflected in the legislation of the arid western provinces but remains implicit in the humid eastern provinces.

However, the article’s working hypothesis has been that the fundamental importance of water to life necessarily means that this Crown ownership of water in situ, whether reflected in statute or not, cannot be full and absolute but rather must be limited, more in the nature of “custodianship” than “ownership”. The role of equity is to attenuate the rigours of the common law in situations when conscience demands it, and the article has explored three equitable institutions — the public trust, the classical trust and fiduciary duties — to see to what extent they might be applicable to limit Crown ownership of water. The second conclusion is that in each case, the argument that Crown ownership of water is so limited is difficult, but not impossible, to make. The major problem with an American-style public trust is assessing its historical underpinnings, and a possible solution is simply to adopt the doctrine as a sui generis concept developed by a sister jurisdiction, without being unduly concerned about its earlier roots. The principal hurdle with a classical trust is not the question of certainty of objects, as was expected, but rather determining how the trust was constituted. The most probable answer is that the Crown’s ownership of water is impressed with a trust in favour of the public by operation of law, under a constructive trust of one sort or another. Finally, the main obstacle with fiduciary duties is determining whether the Crown’s duties in regard to water are fiduciary in nature, and enforceable by the courts as such, or merely “political”. Guerin recognizes that public law duties can give rise to fiduciary duties, but subsequent cases have interpreted this recognition restrictively. The law relating to fiduciary duties in general, and political trusts in particular, is evolving. The upcoming decision of the Supreme Court of Canada in Elder Advocates thus bears watching.