Advance Costs: Indigenous Perspective Pivotal in “Pressing Needs” Analysis
Published:
March 31, 2022
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On March 18, 2022, the Supreme Court of Canada confirmed that an Indigenous government can still satisfy the impecuniosity requirement for an advance costs award (costs a court awards a party to assist in advancing “public interest” litigation before that litigation is finally decided, and regardless of what party ultimately succeeds) to fund public interest litigation even where it has access to some financial resources. And while the Court also confirmed that the review of advance costs applications is rigorous and technical, the decision in Anderson v. Alberta signals the Court’s increased willingness to apply the principles of reconciliation to the impecuniosity analysis, and consider the “pressing needs” of First Nations communities from the perspective of the First Nation itself. Given the increasing number of public interest litigation claims by Indigenous governments, the decision is likely to lead to more advance costs applications by Indigenous governments or parties. It’s also likely that First Nations will argue that courts should similarly apply the principles of reconciliation in other First Nations rights litigation – such as the interpreting the scope of an Aboriginal or treaty right to fish or hunt for a “moderate livelihood” from the perspective of the First Nation.
Beaver Lake Cree Nation sued the Crown arguing it violated Beaver Lake’s rights under section 35 of the Constitution because it “improperly allowed lands traditionally used by Beaver Lake to be ‘taken up’ for industrial and resource development thereby compromising Beaver Lake’s ability to pursue its traditional way of life”. Beaver Lake applied to the court for an order for advance legal costs. At that time, Beaver Lake had already accrued legal costs in the range of $3M, and expected its total costs of the litigation to be around $5M. While Beaver Lake had access to more than $3M in financial resources, it argued it was necessary to allocate those funds to other needs, and was thus impecunious and entitled to an order for advance costs. The case management judge agreed and awarded Beaver Lake advance costs. The Crown appealed to the Alberta Court of Appeal, which reversed the decision. Beaver Lake further appealed to the Supreme Court of Canada, with some success: the Court remitted the case to the Alberta Court of Queen’s Bench for reconsideration and awarded Beaver Lake solicitor-client costs in all three courts, noting the unique situation in the matter.
Advance Costs Role. The Court took the opportunity to reiterate the role of advance costs (aka “interim costs”). The court’s power to award advance costs is grounded in the strong public interest in obtaining a ruling on a legal issue of “exceptional importance” that both “transcends” the individual parties’ interests, and that would not proceed but for public funding. Advance costs are intended to give a public interest litigant the basic assistance necessary for the litigation to proceed. Underlying policy considerations include access to justice where a party is seeking a ruling respecting their constitutional rights and other issues of broad public significance, or a member of a vulnerable and historically disadvantaged group seeks access to the courts in cases of public importance, but lacks the financial resources to proceed. However, an award of advance costs award must be a “last resort”, made in only “rare and exceptional” cases and where failing to do so “would be to participate in an injustice” against both the litigant and the public.
Advance Costs Test. The Court confirmed the test for advance costs remains as set out in its 2003 decision in British Columbia (Minister of Forests) v. Okanagan Indian Band. An applicant seeking advance costs must establish three criteria:
- Impecuniosity.
- Its case has, on its face, merit.
- It involves issues of public importance.
However, the Court further confirmed that even where the applicant establishes these three elements, courts retain a residual discretion to determine whether to award advance costs. Parties should also be sure to obtain clear advance cost awards. They must set out the global cap on legal fees, as well as which parties are to pay what amount, and at what rate. The order must establish a definite structure to provide oversight and direction of the administration of the advance costs award.
Impecuniosity. A party can establish impecuniosity even it has access to financial resources if it can establish that it cannot meet its pressing needs while also funding the litigation.To carry out the impecuniosity assessment in these circumstances, a court must:
- Identify the applicant’s “pressing needs”.
- Determine what resources are required to meet those needs.
- Assess the applicant’s resources, both assets and income.
- Identify the estimated cost of funding the litigation.
Further, to establish impecuniosity, applicants must always demonstrate that they made sufficient efforts to obtain funding from alternative sources. Cost estimates are also vital to establish impecuniosity.
“Pressing Needs”. The court’s analysis of “pressing needs” in the context of public interest litigation involving an Aboriginal claim must be informed by the principles of “reconciliation of aboriginal peoples and non‑aboriginal peoples and their respective claims, interests and ambitions”. Reconciliation principles oblige a court to account for the broader context in which First Nations governments make financial decisions. The court was clear that, in the context of a First Nations government, “pressing needs are not defined by the bare necessities of life. Rather, and in keeping with the imperative of reconciliation, they ought to be understood from the perspective of that First Nation government.” To establish the record in respect of its “pressing needs”, an applicant First Nation government should:
- Keep strong records of budgetary discussions and planning for several years. These may be useful to establish their pressing needs in the event the First Nations government pursues constitutional or public interest litigation and applies for an advance costs award.
- Keep close record of where their financial resources are going and establish a plan for the use of its financial resource, as part of its argument that the resources it has are required, and will be used, to meet pressing needs. Responding parties can challenge the applicant’s expenditures, and the applicant may be required to justify its spending choices.
Please contact your McInnes Cooper lawyer or any member of our Aboriginal & Indigenous Law Team @ McInnes Cooper to discuss the impact of Anderson v. Alberta on Indigenous rights litigation.
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