Whitefish: An Economic Primer

The 2007 Ontario Court of Appeal decision in Whitefish Lake Band of Indians v. Canada (Attorney General) sets out, for the first time, a set of guidelines for establishing compensation for cases in which the Crown allegedly breached its fiduciary duties to a First Nation band. The influence and financial implications of this decision are far reaching, extending well beyond the Ontario courts. Indeed, going forward, it is difficult to imagine a case in Canada of breach of duty by the Crown in which the Crown or Plaintiff's arguments regarding compensation will fail to take account of the Whitefish decision. Nonetheless, a consensus concerning this decision has not yet emerged; all parties agree that Whitefish is important and yet, for the same set of circumstances, the financial implications of Whitefish are said to differ, not just between the Crown and Plaintiff’s positions but sometimes also among the "experts". This would seem to suggest that the implications and implementation of the Whitefish guidelines are legitimately open to different interpretations. This article demonstrates that this view is wrong. It establishes that the only internally consistent and empirically grounded framework for implementing Whitefish is the standard economic model of consumption-saving decision making. Other interpretations implicitly make assumptions about individual behaviour that are at odds with known data, rational economic behaviour and common sense. The article also clarifies which historical data need to be applied to limit the range of feasible compensation, consistent with the application of the standard economic model, for any given case.