Manitoba v Canada

Background

This appeal arises from litigation between the Lac Seul Band and Canada over flooding of the Lac Seul’s lands and the loss of certain hunting, fishing and harvesting rights as the result of a dam’s construction. Canada, in turn, has brought third party claims against Manitoba and Ontario.

In its third party claim against Manitoba, Canada seeks indemnity and contribution arising from a 1928 cost-sharing agreement, the Lac Seul Storage Agreement, that requires Manitoba to indemnify Canada for certain capital costs associated with the dam that gave rise to the flooding. In 1929, Canada transferred its public lands in the province to Manitoba under the Manitoba Natural Resources Transfer Act, which explicitly requires Manitoba to pay Canada for its expenditures under the Lac Seul Storage Agreement.

Manitoba sought summary judgment against Canada’s third party claims on the basis that Canada had agreed in 1943 to settle for all time whatever liability Manitoba might have to it under the Storage Agreement and associated legislation. Manitoba also argued that the claims were time-barred. Their motion was rejected by the Federal Court, which found that Canada’s third party claims had raised a “genuine issue for trial” that could not be disposed of by way of summary judgment.

Court’ of Appeal’s decision

The Court of Appeal found that it was ambiguous whether the 1943 agreement relied on by Manitoba had settled all Manitoba’s obligations, “past, present and future”, or merely settled the amount of loss known to that time. It also found that because the Lac Seul Storage Agreement was subsequently enshrined in legislation there might be different principles that apply in determining how the obligations arising from that agreement could be settled.

The Court of Appeal also rejected an argument from Manitoba that the Federal Court’s “relatively brief reasons and cursory analysis” indicated that it had failed to take a “good hard look at the evidence”. The Court of Appeal found that the reasons were sufficient to show Manitoba’s motion could not succeed and noted that it must presume the lower court considered all the evidence filed unless the appellant can prove the contrary.

Finally, the Court of Appeal rejected Manitoba’s argument that Canada’s third party claims were statute-barred. Canada’s claim for indemnity against Manitoba would only arise in the event that the Federal Court awards damages against Canada in the Lac Seul Band’s main action. As a result, the limitation period for this cause of action had yet to begin to run.