Keep Your (Fiduciary) Hands Off My Money: Louie v. Louie, 2015 BCCA 247

Background

A claimed aboriginal custom for the payment of honoraria to certain band council members did not pass judicial scrutiny in the recent decision of Louie v. Louie, 2015 BCCA 247. In 2009, the Lower Kootenay Indian Band obtained $125,000 from the Regional District of Central Kootenay. The payment was given to the Band to compensate it for the District's use of a road that crossed the Band's reserve. After the funds had been deposited into a general operating account for the Band, a total of $25,000 was paid out to five elected Band Council members. These five members held a meeting and decided to give themselves lump sum payments of $5,000 each as "retroactive honorarium" for their work as members of the Council."1 Mr. Louie, a band member, discovered these payments in 2011 and in the following year filed a Notice of Civil Claim against the five council members. Mr. Louie alleged that these five council members had breached their fiduciary duties "without lawful authority or without juristic reason."2 Mr. Louie also alleged that the five council members had "'conspired together' by acting in bad faith in exercising their powers for an improper purpose and keeping the payments secret for over two years, and that they had failed to make proper disclosure and to follow 'financial procedures pursuant to the Indian Act.'"3 Mr. Louie requisitioned a declaration outlining that each one of the defendants had breached their fiduciary duties owed to the Band and requiring each of them to return the $5,000 in addition to punitive damages. The defendants responded by denying that the payments had been "behind closed doors" and that they breached "any legal or equitable duty."4 The defendants claimed that "their decision was 'within the scope of the Council's duties, done in accordance with the Handbook and the customs, procedures and/or obligations of LKB governance, and was in the best interest of the Band.'"5

The First Ruling

At the British Columbia Supreme Court level, the court dismissed the action and found that breach of fiduciary duty had not been established. The court found that despite the Band's lack of a constitution or financial administration bylaws, the Council's actions were aligned with the "custom and practices of prior Band Councils."6 As such, the court held that the breach of fiduciary duty was to be determined by the Band's practices over the past few decades. The court noted that none of the defendants signed their own...