Back

The Supreme Court of Canada considers the approach to an application for advance costs

Alberta

,

Canada

In Anderson v Alberta, 2022 SCC 6, the applicant, the Beaver Lake Cree Nation, a First Nation Band, applied for advance costs to fund its litigation under s. 35 of the Constitution Act, 1982. The band chief had sued the Province of Alberta and the Government of Canada on her own behalf and as a representative of all Beaver Lake Cree Nation beneficiaries of Treaty No. 6 and of Beaver Lake Cree Nation (collectively, Beaver Lake).

Beaver Lake’s application initially failed on the grounds that the band was not impecunious. It had the funds to fund the litigation, although the band claimed that those funds could not be used to fund the litigation, as they were devoted to other priorities, such as improving deficits in housing, infrastructure, and basic social programming.

The Supreme Court of Canada allowed the appeal and the matter was remitted back to the Court of Queen’s Bench in Alberta. Writing for the majority, Karakatsanis and Brown J.J. applied principles of reconciliation to the advance costs case and found that Beaver Lake was impecunious, as its funds were devoted to addressing its “pressing needs” and were not available to fund the public interest litigation.

Advance Costs Test

The Supreme Court identified the following principles relating to an application for advance costs:

  • A court’s equitable jurisdiction over costs confers discretion to decide when, and by whom, costs are to be paid. This includes the power to award advance costs (also referred to as “interim costs”) prior to the final disposition of public interest litigation and in any event of the cause. Such awards are “meant to provide a basic level of assistance necessary for the case to proceed”.
  • Advance costs could be awarded based on the strong public interest in obtaining a ruling on a legal issue of exceptional importance, that not only transcended the interests of the parties but also would, in the absence of public funding, have failed to proceed to a resolution, creating an injustice.
  • Access to justice is an important policy consideration underlying advance costs awards where a litigant seeks a determination of their constitutional rights and other issues of broad public significance, but lacks the financial resources to proceed. It has also been recognized by this Court as “fundamental to the rule of law”.
  • Costs awards can permit litigants of limited means, including vulnerable and historically disadvantaged groups, to have access to the courts in cases of public importance.
  • Notwithstanding obstacles to access to justice such as underfunded and overwhelmed legal aid programs and growing instances of self‑representation, the Court in Okanagan “did not seek to create a parallel system of legal aid or a court‑managed comprehensive program”. Rather, Okanagan applies to those rare instances where a court would be “participating in an injustice — against the litigant personally and against the public generally” — by declining to exercise its discretion to order advance costs.
  • Where an applicant seeks to have its litigation funded by the public purse, courts must be mindful of the constraints of their institutional role. Those constraints necessarily confine a court’s discretion to grant such an award to narrow circumstances. It must be a “last resort”, reserved for the “rare and exceptional” case and where to refrain from awarding advance costs would be to participate in an injustice.
  • The test for advance costs is rigorous. Okanagan states three “absolute requirements” that must be satisfied: impecuniosity, a prima facie meritorious case, and issues of public importance.
  • While meeting these requirements is necessary, doing so does not automatically entitle an applicant to an advance costs award. Where the requirements are satisfied, a court — having considered all relevant individual circumstances of the case — retains residual discretion to decide whether to award advance costs, or to consider other ways of facilitating the hearing of the case.

Applying Principles of Reconciliation

Karaktsanis and Brown JJ. went on to explain the significance of reconciliation in the advance costs test, with respect to a First Nation government applicant involved in s. 35 litigation.

Where litigation raises novel issues concerning the interpretation of Aboriginal and treaty rights and the infringement of those rights, this may have significant weight in a court’s analysis of the public importance branch of the advance costs test and the exercise of its residual discretion. In assessing impecuniosity, a court must respectfully account for the broader context in which First Nations governments such as Beaver Lake make financial decisions. Promoting institutions and processes of Indigenous self‑governance fosters a positive, mutually respectful long‑term relationship between Indigenous and non‑Indigenous communities, thereby furthering the objective of reconciliation. 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.

The Impecuniosity Requirement: Pressing Needs

The Supreme Court has stated the requirement of impecuniosity in varying, but strict, terms. In Okanagan, it held that an applicant is impecunious if it “genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing the issues to trial — in short, the litigation would be unable to proceed if the order were not made”. In this case, the parties agreed that the assessment of impecuniosity must look beyond the First Nation government’s financial resources in the abstract. A snapshot in time of its resources was an important part of the analysis. But to assess whether a First Nation government genuinely cannot afford to pay for litigation, a court must also consider the broader context in which that government makes financial decisions, including its competing spending commitments, restrictions on the uses of its resources, and fiduciary and good governance obligations. A First Nation government may genuinely need to allocate some or all of its resources to priorities other than litigation.

The Court declined to modify the impecuniosity requirement, but held that the concept of necessity was captured by the Court’s direction that advance costs are to be ordered as a “last resort”, where the First Nation government “genuinely cannot afford” the litigation and where it is “impossible to proceed”. It is open to a court to decide that a First Nation government is impecunious when its prioritization of “pressing needs”, properly understood, has left it unable to fund public interest litigation. An applicant genuinely cannot afford to pay for the litigation where, and only where, it cannot meet its pressing needs while also funding the litigation. And, as we explain further below, where the applicant is a First Nation government, pressing needs must be understood from the perspective of the First Nation government.

Bearing in mind the extraordinary nature of the remedy, and the constraints of the judicial role in ordering the expenditure of public funds, assessing whether a First Nation government has sufficient resources to pay for the litigation after meeting its pressing needs requires that a court have a sufficient record to (1) identify the applicant’s pressing needs; (2) determine what resources are required to meet those needs; (3) assess the applicant’s resources (both assets and income); and (4) identify the estimated cost of funding the litigation. The level of evidential granularity required for a trier of fact to apply the legal test will vary, depending on the circumstances of the applicant. Detailed proof of an applicant’s pressing needs and the extent to which they are unfunded, and estimated litigation costs, may be required to ensure accountability over the expenditure of public funds. At the same time, it must not be prohibitively expensive to establish impecuniosity.

May 19, 2022
Anderson v Alberta, 2022 SCC 6