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Supreme Court Clarifies Advanced Costs Test for First Nations Public Interest Litigation

Supreme Court Clarifies Advanced Costs Test for First Nations Public Interest Litigation

The Supreme Court of Canada (“SCC”) recently decided Anderson v Alberta, a case involving litigation between an Alberta First Nation against the Crown under s. 35 of the Constitution Act, 1982. The underlying claim in this case was by Beaver Lake Cree Nation (“BLCN”), alleging the Crown improperly allowed lands traditionally used by BLCN to be “taken up” for industrial and resource development thereby compromising its ability to pursue its traditional way of life. 

The litigation, expected to cost an estimated $5 million, is scheduled as a 120 day trial starting in January 2024. BLCN made an application for advanced costs to fund the litigation in the Court of Queen’s Bench of Alberta, arguing that by the time its application was heard it had already spent approximately $3 million in legal fees, which was paid from its own funds and from third party fundraising. 

The case management judge in Queen’s Bench granted the application for advanced funding, acknowledging her decision was ultimately discretionary, and finding that BLCN satisfied the elements of the legal test for awarding advanced costs: the impecuniosity of the applicant, a prima facie meritorious case, and issues of public importance. As such, the case management judge ordered each of BLCN, Canada and Alberta to contribute $300,000 annually to the credit of BLCN’s legal fees until the trial was concluded or litigation was otherwise resolved.

The Court of Appeal of Alberta allowed Canada and Alberta’s appeals and set aside the case management judge’s order. Before the Court of Appeal, Canada tendered fresh evidence that BLCN had received $2.97 million in settlement of a specific claim, and the Court of Appeal held in light of this evidence and the case management judge’s findings that BLCN had at least $6 to $7 million to fund the litigation that BLCN therefore did not satisfy the requirement for impecuniosity. 

Factors for assessing impecuniosity: the pressing needs of the First Nation

The appeal of the Court of Appeal’s decision was heard by the SCC, where the Court clarified the factors to be considered for assessing the impecuniosity of a First Nation applicant, stating that a court must respectfully account for the broader context in which First Nations governments such as BLCN make financial decisions. In the context of the impecuniosity analysis, this means that the pressing needs of a First Nation should be considered from the perspective of its government that sets its priorities and is best situated to identify its needs. 

According to the SCC, an applicant will meet the test for impecuniosity where it genuinely cannot afford to pay for the litigation and cannot meet its pressing needs while also funding the litigation. Where the applicant is a First Nation government, pressing needs must be understood from the perspective of the First Nation government. 

Assessing pressing needs requires a court to have a sufficient record to:

  • Identify the applicant’s pressing needs;
  • Determine what resources are required to meet those needs;
  • Assess the applicant’s resources (both assets and income); and
  • Identify the estimated cost of funding the litigation. 

The SCC further stated that the goal of reconciling Aboriginal interests with the broader interests of society will inform how a court identifies the pressing needs of a First Nation government.  As such, reconciliation requires a court to assess pressing needs from the perspective of the First Nation government that sets its own priorities and is best situated to identify its needs. 

Assessment of BLCN’s impecuniosity

The SCC applied its framework to BLCN’s application for advanced costs and found the case management judge’s findings on BLCN’s impecuniosity (and the record before her) was insufficient to support an award for advanced costs. Although the case management judge appropriately identified BLCN’s pressing needs, the SCC found she did not make findings regarding the estimated costs of its pressing needs, nor the extent to which those costs were not covered by the financial resources available to BLCN (and the record did not have sufficient information to quantify such findings). 

Because additional evidence was required regarding BLCN’s assets and income, including the fresh evidence regarding its $2.97 million settlement, the SCC remitted the application back to the Court of Queen’s Bench for reconsideration. The SCC also awarded solicitor-client costs to BLCN for its SCC appeal and for its action in the courts below. 

Assessment of impecuniosity in public interest litigation

This case presents a welcome clarification regarding how litigants must meet the legal test for impecuniosity in matters of advanced costs applications of public interest litigation. In particular, First Nation governments will need to provide sufficient evidence for a court to assess its pressing needs in the event of advancing an impecuniosity argument for advanced costs, including a detailed litigation plan for public interest litigation. 

Ultimately, this decision should improve access to justice for First Nation governments, as the SCC rejected the Court of Appeal’s very narrow interpretation of impecuniosity and the Court of Appeal’s holding that BLCN’s spending on deficits in housing, infrastructure, and basic social programming represented “spending on desirable improvements” rather than spending on pressing needs.  

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*This update is intended for general information only on the subject matter and is not to be taken as legal advice.

Posted: April 26, 2022


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