On March 18, 2022, the Supreme Court of Canada issued a decision in Anderson v Alberta [Beaver Lake Cree] that elaborates on the test for awarding advance costs to offset the expenses of public interest litigants. The decision arises in the context of Indigenous rights litigation, but extends to other cases involving public interest issues.

Background to the Case

In 2008, Beaver Lake Cree Nation (BLCN), a Treaty 6 Nation, initiated a claim against Alberta and Canada for improperly allowing its lands to be taken up for industrial and resource development through many years of activity permitting without adequately considering the cumulative effects. The case is scheduled for a 120-day trial beginning in January 2024. BLCN estimates the litigation will cost $5 million. It brought a preliminary application to seek advance costs to fund the litigation.

The case management judge awarded BLCN advanced costs applying the test for awarding costs established in BC (Minister of Forests) v Okanagan Indian Band and Little Sisters Book and Art Emporium v. Canada.  The Court of Appeal set aside the case management judge's decision on the basis that the case management judge erred in her conclusions when applying the test.  BLCN appealed to the Supreme Court of Canada.

The Court could not say that BLCN had shown that it would be unable to proceed with private funding, but "the entire point of this appeal was to explain what it must show in order to meet that threshold" (para. 74).

The Court allowed BLCN's appeal and remitted the case back to the trial court to re-hear BLCN's application based on the guidance the SCC set out in the decision. The question of advance costs for a First Nation claimant is exceptional matter of public interest, and "not only a case of first impression, but one that goes to the heart of the separation of powers" (para. 73).

The Three-Part Test for Advanced Costs

The Court began with "first principles" and reviewed the equitable jurisdiction to award costs, including the power to award costs before the final disposition as explained in Okanagan. "Such awards are 'meant to provide a basic level of assistance necessary for the case to proceed'" (para. 19).

Advance cost should only be awarded in "rare instances" when refusing an advance cost order would be "participating in an injustice—against the litigant personally and against the public generally" (para 21). Awarding advance costs in other circumstances would amount to "imprudent and inappropriate judicial overreach" (para 21).

This cost remedy must be a "last resort." The rationale for the caution is rooted in the separation of powers. The Court explained that "our constitutional framework prescribes different roles for the executive, legislative and judicial branches" and that it is "fundamental that no one of them overstep its bounds, that each show proper deference for the legitimate sphere of activity of the other" (para. 22).

The test for advance costs is "rigorous" and three "absolute requirements" must be satisfied:

  1. impecuniosity;
  2. prima facie meritorious case; and
  3. issues of public importance (para. 24).

The Court also explained the role of reconciliation in litigation related to rights under section 35 of the Constitution. If litigation raises novel issues of interpretation of Indigenous and treaty rights and the infringement of those rights, that context may weigh significantly when assessing the public importance branch of the advance costs test (para. 25).

The Court explained that when assessing the impecuniosity aspect of the test, a court should also consider the issue of "pressing needs" from the perspective of the First Nation and its governing priorities (para. 27). A First Nation government may be considered impecunious if its prioritization of pressing needs for its community leave it unable to fund public interest litigation.

An applicant for advance costs must provide a litigation plan and sufficient evidence of its financial resources. This information will be relevant to the Court's decision on the quantum of any award and whether the applicant must contribute to funding the litigation (para. 29).

The Court also cautioned that "a class-based presumption of impecuniosity would risk turning the advance costs test into a parallel system of legal aid which, as noted above, would signify imprudent and inappropriate judicial overreach" (para. 35).

Applying the Test to the Beaver Lake Cree Nation Circumstances

Canada and Alberta conceded that BLCN's case was prima facie meritorious, but each argued that BLCN had access to significant assets and revenues, so it was not impecunious. The case management judge also found that the public importance requirement was satisfied, since BLCN's case raised a novel issue on the interpretation of Indigenous and treaty rights (para. 11).

On the impecuniosity issue, the case management judge found that, although BLCN had unrestricted funds, it also had substantial pressing needs. She concluded that BLCN was impecunious because it "cannot fund the litigation at the rate required to bring it to trial" and should not have "to choose between pursuing this litigation and attempting to provide for the basic necessities of life" (para. 13).

The Court noted that the case management judge acting without the benefit of the Court's reasons, "made general observations about Beaver Lake's financial resources and pressing needs to find that it was an impoverished community. On the record before her, that finding is unassailable." That said, the record before her and her findings were insufficient. "She did not make the particular findings necessary in these circumstances to decide impecuniosity or to determine the amount of advance costs required to enable Beaver Lake to pursue the litigation" (para. 54).

In particular, the case management judge did not make findings about the estimated costs of the BLCN pressing needs or the extent to which BLCN's financial resources could meet those needs (para. 57). The analysis required "a more particularized and comprehensive record in order to consider whether Beaver Lake had made sufficient efforts to obtain funding from alternate sources" (para. 67).

Key Takeaways

This decision re-affirms the rigorous nature of the advance cost award test, and elaborates on the tests that a court must apply and rationale for those tests, including the need to consider that despite having financial capability, such capability may be used to fund non-litigious pressing needs of a First Nation government.

The Court also identified the specific nature and type of evidence that must support an application for advance cost. This evidence also illustrates the rigor that a court will apply before awarding advance costs.

Finally, the Court explained how public interest litigation involving novel issues of interpretation of Aboriginal and treaty rights will attract added weight in the assessment of the public importance of the litigation.

In all cases, the Court will avoid any class-based presumptions related to advance cost awards, preferring a detailed assessment of the specific circumstances of each case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.