Courts Order Canada and Province to Pay First Nations' Costs in Litigation Before Trial

In two recent decisions, the Courts have ordered Canada and British Columbia to pay First Nations' costs before the trial. "Costs" generally represent a percentage of the legal fees incurred in litigation. The decisions are significant because costs orders are otherwise usually awarded only after trial in favour of the successful party.

The Jules decision

In the Jules case, members of the Okanagan Indian Band and other Bands logged Crown land without authorization under the British Columbia Forest Practices Code. The Minister of Forests commenced proceedings to stop the Bands' logging on Crown land. The Bands challenged certain sections of the Code on the basis that they did not accommodate the Bands' asserted title to the Crown lands and their asserted right to log the lands. Further, the Bands argued that the Court should use its jurisdiction to order the Province to pay the First Nations the costs of litigation. The Bands were unsuccessful at the British Columbia Supreme Court and appealed to the British Columbia Court of Appeal.

In November 2001, the British Columbia Court of Appeal ruled in their favour, ordering that the Province must pay the costs of the First Nations bringing the Jules action in advance of the trial. Although costs rarely come close to the actual legal expenses incurred in litigation, they do cover a percentage of the legal fees. The Court held that it had jurisdiction to order costs in advance where the case involved special, exceptional or unique circumstances.

On December 12, 2003, the Supreme Court of Canada upheld the British Columbia Court of Appeal's decision in Jules. The Court set out three conditions which a party must meet to be granted an interim costs order. First, the party must be "impecunious" to the extent that without such an order for costs it would be unable to proceed with the case. Second, the claimant must have a case of sufficient merit. Third, special circumstances must be present.

Further, the Court said that in public interest litigation, special considerations came into play. Namely, in addition to the above requirements, the issues raised must not have been resolved in previous cases, must transcend individual interests and be of public importance.

The Court found that in the Jules case all of the above criteria had been met. The Bands could not proceed to trial without an order for interim costs. The case was of sufficient merit that it should go forward; the issues sought to be raised at trial were of profound importance to all the people of British Columbia, and determination of the issues would be a "major step towards settling the many unresolved problems in the Crown-aboriginal relationship".

The Tsilhqot'in decision

Although the Tsilhqot'in Nation case was decided in 2002, before the Supreme Court of Canada rendered its decision in Jules, it provides helpful guidance. The Tsilhqot'in and Xeni Gwet'in First Nations brought an action asserting aboriginal rights and title in respect of certain lands in the Cariboo region of British Columbia after the government had issued forest licences without their consent. The First Nations had unsuccessfully applied to the federal Indian Test Case Funding Program and to British Columbia for funding in order to continue with the litigation through trial. The First Nations brought an application to the Court for an order requiring the Province and Canada to pay all of its future legal fees and disbursements or, alternatively, the "costs" (a fraction of the actual legal fees and disbursements) in advance of the trial.

The British Columbia Supreme Court noted that the First Nations had already incurred large legal fees and that it lacked the financial resources to continue the case. The judge dismissed the application for the payment of all legal fees, but granted the order for costs in advance. His decision was upheld by the British Columbia Court of Appeal.

Even though in the Jules case the First Nations were defendants, while in this case they were plaintiffs, the judge held that the question of who brings the court action is not a relevant basis upon which to distinguish the two cases, since rights and title were being asserted in both cases in response to Crown activities.

In reference to public importance, the judge noted that the matter before him would be the first post-Delgamuukw aboriginal title trial and that a unique feature of the case was the Province's argument that the creation of reserves had extinguished the First Nations' aboriginal rights.

Canada and the Province argued that it was open to the First Nations to enter into a contingency fee arrangement with the solicitors, but the judge held that even if the First Nations were successful, there was unlikely to be a fund of money available for the payment of legal fees on a contingency basis.

Finally, the government contended that the First Nations should be first required to exhaust all available remedies, such as the British Columbia Treaty Process. To that argument, the judge said that the First Nations had already invested twelve years in the litigation process and it would be unfair to require them to engage in treaty negotiations, where the situation was "unknown and uncertain".

The judge ordered Canada and the Province to share equally in the payment of 50% of the First Nation's future "special costs" (usually 90% of actual legal fees) plus reasonable disbursements.

Implications for First Nations involved in litigation

Given the financial restrictions facing many First Nations, the Jules and Tsilhqot'in decisions are of substantial significance. They demonstrate that Courts are open to ordering that some of the costs of litigation be paid by the government in advance of the trial.

Although the British Columbia Court of Appeal held that it is irrelevant whether the First Nation is a plaintiff or a defendant, it is possible that the Court will recommend pursuing treaty negotiations if no time, effort or financial resources have yet been invested into litigation. Further, First Nations are required to show special circumstances in order to qualify for an order of costs in advance. It is yet unknown if the courts will consider future title cases to be exceptional once it has agreed that the Province should fund one "test case".

Finally, it is important to remember that a "costs" order will only cover some of the actual expenses incurred by a First Nation in litigation. The Court has not ordered Canada or British Columbia to cover all costs and disbursements.