Pictou First Landing First Nation v. Nova Scotia (Attorney General)

Pictou First Landing First Nation v. Nova Scotia (Attorney General) Court Supreme Court Date 2014-02-27 Citation 2014 NSSC 61 Docket Hfx 335700 Judge/Registrar/Adjudicator Chipman, James L. (Honourable Justice) Document Type Decision Decision Content SUPREME COURT OF NOVA SCOTIA Citation: Pictou Landing First Nation v. Nova Scotia (Attorney General) 2014 NSSC 61 Date: 20140227 Docket: Hfx. No. 335700 Registry: Halifax Between: The Council of the Pictou Landing First Nation on their own behalf and on behalf of all members of the Pictou Landing First Nation Plaintiffs v. The Attorney General of Nova Scotia representing Her Majesty the Queen in the right of the Province of Nova Scotia First Defendant - and - Northern Pulp Nova Scotia Corporation a body corporate Second Defendant - and - Neenah Paper Company of Canada a body corporate Third Defendant - and - Kimberly-Clark Inc. a body corporate Fourth Defendant - and - Kimberly-Clark Nova Scotia Incorporated a body corporate Fifth Defendant DECISION Judge: The Honourable Justice James L. Chipman Heard: January 27 and 28, 2014 in Halifax, Nova Scotia Counsel: Brian J. Hebert for the Plaintiffs Alex M. Cameron for the First Defendant, Attorney General of Nova Scotia Harvey L. Morrison, Q.C. for the Second Defendant, Northern Pulp Nova Scotia Corporation By the Court: INTRODUCTION [1] The Plaintiffs, The Council of Pictou Landing First Nation on their own behalf and on behalf of all members of the Pictou Landing First Nation (“PLFN”), bring this Motion against the Defendant, The Attorney General of Nova Scotia (“AGNS”) for payment of costs in advance of trial. PLFN rely on the following legislation, rules or points of law in their Notice of Motion filed November 8, 2013: • Civil Procedure Rule 77.02 • the inherent power of the Court to control its own proceedings as set out in British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] S.C.R. 371 • the Treaty of Peace and Friendship concluded on June 25, 1761 • the Royal Proclamation of 1763 • the Constitution Act, 1982 • the doctrine of the Honour of the Crown in its dealings with First Nations [2] The evidence filed in support of the Motion consists of two affidavits sworn by PLFN Chief Andrea Paul (“Chief Paul”) and one affidavit sworn by PLFN Director of Lands and Environment and Boat Harbour Advisor, Dan MacDonald. In resisting the Motion, the AGNS relies on the affidavit of John R. Power, Q.C., the lead negotiator and senior general counsel for the Government of Canada, in respect of its negotiations with representatives of PLFN arising from PLFN’s 1986 lawsuit against the Government of Canada in relation to Boat Harbour (Federal Court Action No. T - 1075 - 86). [3] The Second Defendant, Northern Pulp Nova Scotia Corporation (“Northern Pulp”) also opposed the Motion on the basis that: “Such a payment, if ordered, would be used by the Plaintiff to fund its action against all the Defendants.” [4] Northern Pulp filed two affidavits sworn by Don Breen, Acting General Manager of Northern Pulp, and one affidavit sworn by Don Brown, a property paralegal employed by Northern Pulp’s counsel. [5] During the hearing of this matter, Chief Paul, Mr. MacDonald and Mr. Breen were cross-examined. [6] In argument, the AGNS took the position that Chief Paul’s affidavits tendered several documents for which she could proffer no personal knowledge. Further, it was submitted that many of the documents were simply appended, without Chief Paul stating the source of the information and without stating any belief in the truth of the information. Finally, it was pointed out that many of the references in her affidavits were made to unnamed sources of information. I find that to the extent Chief Paul’s affidavits do not conform to the obligatory requirements set out in such cases as: Weldon v. Kavanagh (1989), 94 NSR (2d) 181 (CA), Canadian National Railway Co. v. Halifax, [2012] N.S.J. No. 435 (NSSC) and Waverley v. Nova Scotia (Minister of Municipal Affairs), [1993] NSJ No. 151 (NSSC), this has no bearing on my ultimate disposition, as will be apparent. THE LEGAL TEST [7] All parties agree, as do I, that the within application is governed by the test set out at paras. 40 and 41in British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371 (the “Okanagan Test”): i) The party seeking interim costs 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; ii) The claim to be adjudicated is prima face meritorious; that is, the claim is at least of sufficient merit that it is contrary to the interests of justice for the opportunity to pursue the case to be forfeited just because the litigant lacks financial means; iii) The issues raised transcend the individual interests of the particular litigant, are of public importance, and have not been resolved in previous cases; and (iv) The Court decides it should exercise its discretion and make an order for Advance Costs [8] Since Okanagan, the Supreme Court of Canada decided two further advance or interim costs cases. The Okanagan decision was followed by Little Sisters Book and Art Emporium v. Canada, [2007] S.C.J. No. 2 and R. v. Caron, [2011] S.C.J. No. 5. [9] In Okanagan, the members of several native bands began logging on Crown land in British Columbia. The Government of British Columbia took proceedings to prevent the logging. As the majority would later note in Little Sisters, the case raised issues, “vital both to their survival and to the government’s approach to aboriginal rights.” (para. 2). The Supreme Court of Canada majority went on, in Little Sisters, to say this about Okanagan: 33 An exceptional convergence of factors occurred in Okanagan. At the individual level, the case was of the utmost importance to the bands. They were caught in a grave predicament: the costs of the litigation were more than they could afford, especially given pressing needs like housing; yet a failure to assert their logging rights would seriously compromise those same needs. On a broader level, the case raised aboriginal rights issues of great public importance. There was evidence that the land claim advanced by the bands had prima facie merit, but the courts had yet to decide on the precise mechanism for advancing such claims - the fundamental issue of general importance had not been resolved by the courts in other litigation. However the case was ultimately decided, it was in the public interest to have the matter resolved. For both the bands themselves and the public at large, the litigation could not, therefore, simply be abandoned. In these exceptional circumstances, this Court held that the public’s interest in the litigation justified a structured advance costs order insofar as it was necessary to have the case move forward. [emphasis added] [10] In Little Sisters, the Applicant bookstore challenged an order detaining imported books. The order was made by the Commissioner of Customs and Revenue on the basis that the books were “obscene.” The application for advance costs was dismissed. [11] The majority decision held that access to justice was not the “paramount consideration” in awarding advance costs. Advance costs were limited to “special circumstances related to the public importance of the issues of the case.” They were, “exceptional,” “granted with caution as a last resort, “where their need is “clearly established.” (para. 36). Further: ... An application for advance costs may be entertained only if a litigant establishes that it is impossible to proceed with the trial and await its conclusion, and if the court is in a position to allocate the financial burden of litigation fairly between the parties. [emphasis added] [12] At paras. 39 and 41, the majority in Little Sisters went on to state: 39 First, the injustice that would arise if the application is not granted must relate both to the individual applicant and to the public at large. This means that a litigant whose case, however compelling it may be, is of interest only to the litigant will be denied an advance costs award. It does not mean, however, that every case of interest to the public will satisfy the test. The justice system must not become a proxy for the public inquiry process, swamped with actions launched by test plaintiffs and public interest groups. As compelling as access to justice concerns may be, they cannot justify this Court unilaterally authorizing a revolution in how litigation is conceived and conducted. 40 Second, the advance costs award must be an exceptional measure; it must be in the interests of justice that it be awarded. Therefore, the applicant must explore all other possible funding options. These include but are not limited to, public funding options like legal aid and other programs designed to assist various groups in taking legal action. An advance costs award is neither a substitute for, nor a supplement to, these programs. An applicant must also be able to demonstrate that an attempt, albeit unsuccessful, has been made to obtain private funding through fundraising campaigns, loan applications, contingency fee agreements and any other available options. If the applicant cannot afford all costs of the litigation, but is not impecunious, the applicant must commit to making a contribution to the litigation. Finally, different kinds of costs mechanisms, like adverse costs immunity, should also be considered. In doing so, courts must be careful not to assume that a creative costs award is merited in every case; such an award is an exceptional one, to be granted in special circumstances. Courts should remain mindful of all options when they are called upon to craft appropriate orders in such circumstances ... 41 ... Again, we must stress that advance costs orders are appropriate only as a last resort ... Courts should also be mindful to avoid using these orders in such a way that they encourage purely artificial litigation contrary to the public interest. [emphasis added] [13] The majority concluded as follows at para. 78: 78. The rule in Okanagan arose on a very specific and compelling set of facts that created a situation that should hardly ever occur. As this Court held in Okanagan, an advance costs award should remain a last resort. The costs award in the instant case did not meet the required standards. [emphasis added] [14] Little Sisters was followed by R. v. Caron where the Supreme Court of Canada was unanimous that the circumstances of that case warranted advance costs. [15] Caron involved a routine prosecution for a minor traffic offence. The defendant argued he was entitled to use French. At issue was “a fundamental aspect of the rule of law in Alberta” (para. 7). Justice Binnie went on in para. 8 to say: As stated, the Alberta Languages Act enacted following this Court’s decision in Mercure purports to abolish minority French language rights in the province. The impact of Mr. Caron’s challenge, if ultimately successful, could be widespread and severe and include, according to Mr. Caron, the requirement for Alberta to re-enact most if not all of its laws in both French and English. The case, in short, has the potential (if successful) to become an Alberta reply of the Reference re Manitoba Language Rights, [1992] 1 S.C.R. 212. This is what makes the case ‘sufficiently special’ in terms of Okanagan/Little Sisters (No. 2). [16] Justice Binnie acknowledged that Okanagan “was based on the strong public interest in obtaining a ruling on a legal issue of exceptional importance, (para. 6), and noted that advance costs awards were, “highly exceptional and made only where the absence of public funding would work a serious injustice to the public interest.” APPLICATION OF THE FIRST CRITERION OF THE OKANAGAN TEST [17] Once again, Justice LeBel’s majority decision set out the criteria of the Okanagan Test with the first part reading: i. The party seeking interim costs 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; [18] Accordingly, I will now apply the evidence adduced on this aspect of the test with regard to what the Supreme Court of Canada has said must be demonstrated by an applicant seeking advance costs. [19] PLFN led evidence to the effect that their members are living in a very difficult socio-economic situation. Chief Paul deposed that the Band Council commissioned a survey of approximately thirty percent of Band members over age eighteen. The results of the survey indicated just 22.5% of adult Band members were employed full time. Only 6% had income over $50,000.00 per annum and 77% earned less than $25,000.00 per year. Half of all surveyed reported receiving some form of social assistance. [20] In her first affidavit, Chief Paul set out a number of PLFN’s challenges including: • Housing shortages • Existing housing requiring over $4.5 million in upgrades • Infrastructure needs including the requirement for a Band administration building, recreation facility, fire station and sidewalks. [21] On cross-examination, Chief Paul explained that she, along with the Band Council, produces an annual plan based on a number of proposals and that they prioritize where funding goes. [22] Appended to Chief Paul’s first affidavit were PLFN’s financial statements from the fiscal year ended March 31, 2008 to the fiscal year ended March 31, 2013. These confirm almost all of PLFN’s funding comes from the Government of Canada. In reviewing the financial statements against the backdrop of the Band’s requirements, it would appear PLFN is dependent on this funding to meet its members’ basic needs. [23] Chief Paul deposed as to PLFN’s other revenue sources. In addition to government funding, the Band receives revenue from fishing licenses and a gas bar/convenience store. Even accounting for this income, PLFN’s net liabilities are presently in the order of $3.8 million. [24] According to the first affidavit of Chief Paul, PLFN has land holdings with an assessed value of slightly in excess of $1.6 million. [25] In addition to the land, fishing licenses and gas bar/convenience store, PLFN has a significant potential revenue source in the Boat Harbour Trust Fund. In argument, their counsel referred to it as “the elephant in the room.” In his pre-hearing brief, Mr. Hebert described the Boat Harbour Trust Fund as follows: 83. Pictou Landing members are also the beneficiaries of a trust fund (the “Trust Fund”) that was established under the terms of the Boat Harbour Settlement Agreement with Canada and is governed by the terms of a trust agreement (the ‘Trust Agreement’) and the Boat harbour Settlement Agreement itself. 84. The net fair market value of the Trust Fund as at December 31, 2012 was $29,353,108. However, $26,124,914 of those funds are restricted under the terms of the Trust Agreement and Boat Harbour Settlement Agreement. 85. Use of the income generated by the Trust Fund is also restricted. Historically Pictou Landing has spent approximately $350,000 each year on various projects and programs including the school lunch program which provides meals to all school children. The church committee, the business equity grant committee, the Pow Wow committee, the youth Committee and the housing department have each received funds over the years from the Trust Fund. All such expenditures from the Trust Fund are approved by Pictou Landing members in an annual referendum. 86. In addition Pictou Landing distributes approximately $230,000 each year to eligible community members, that is, those members who have lived in Pictou County for 6 of the previous 12 months. As these payments are paid each year in December, they have become known as ‘Christmas payments’. Each eligible member receives a Christmas payment of between $450-550 each year. 87. Under the terms of the Trust Agreement the trust terminates on July 3, 2014. Disposition of the Trust Funds on termination is governed by the Trust Agreement and the Boat Harbour Settlement Agreement. At that time approximately $3,328,710 will be divided equally among all 628 Band members for a total of $5,300 each. 88. A further $4,399,484 will be paid to Chief and Council to be used for such community purposes as permitted under Section 4.2.1 of the Boat Harbour Settlement Agreement. Those purposes are: resource rehabilitation, resource development, cultural support and development, social support and development, business development, economic development, employment development, community infrastructure, housing development and reasonable technical, legal and management activities in pursuit of Band goals and objectives. Chief and Council are considering the use of these funds for a number of pressing needs. 89. The disposition of the balance of the trust funds is uncertain at this time. These funds which amounted to $21,624,914 as of December 31, 2012, are held in the Community Development Account under the terms of the Boat Harbour Settlement Agreement. These funds are restricted and may only be used in the event that Pictou Landing relocates to another Reserve. Upon termination of the trust on July 3, 2014 these funds may be used for other purposes subject to discussion between Pictou Landing and Canada. It is not clear whether Canada and Pictou Landing must agree on these funds, but Canada has taken the position that these funds should be placed in trust again on similar terms, that is, that they be used only to relocate Pictou Landing to another Reserve. . . . 144. The Trust Fund was established in 1993 as compensation for the wrongs Canada committed in allowing the Boat Harbour treatment facility to be established in the first place. At the moment only $3,228, 914 is available for the community purposes set out in the Boat Harbour Settlement Agreement. The community spends on average $350,000 each year on community projects including the school lunch program. Individual members receive less between $450 and $550 each year in Christmas payments or $230,000 per annum collectively. 145. When the trust fund expires in July 2014 each member will receive $5,300 each from the fund. An additional $4,399,484 will be available to Chief and Council for the broad community purposes enumerated in the Boat Harbour Settlement Agreement. However, the bulk of the funds ($21, 624,914) are subject to discussion with the Canada and Canada has taken the position that these funds should remain in trust to be used only for purposes of relocating the community if this becomes necessary. [26] On cross-examination, Chief Paul was asked about para. 122 in her first affidavit where she deposed: 122. It is my further understanding that upon termination of the trust the Community Development Account will be restricted to uses to be discussed between Canada and Pictou Landing First Nation. Canada has expressed its position that these funds should be placed in a further trust subject to the same restrictions until such time as wastewater is no longer discharged into Boat Harbour with the exception of minor adjustments to the inflation protections of the current agreement. [27] She said she agreed with the apparent stance of the Government of Canada as she felt this arrangement would protect the children of PLFN. [28] Returning to the Okanagan criteria of impecuniosity, the majority stated: “... it must be proven to be impossible to proceed otherwise.” Advance costs were referred to as a “last resort” (para. 71). [29] Further, in Little Sisters at para. 40, the Supreme Court of Canada asserted: “The applicant must explore all other possible funding options.” [30] Undoubtedly mindful of the above requirements, PLFN made attempts to secure outside funding alternatives including approaching the Nova Scotia Legal Aid Commission, Lexfund (a private litigation loan company) and PLFN’s bank, the Bank of Montreal. Chief Paul also indicated that PLFN’s lawyer’s opinion is “that the lawsuit is not suitable for a contingency fee agreement” (para. 90, Chief Paul’s November 6, 2013 Affidavit). [31] By way of written and oral arguments, Mr. Hebert elaborated as to the basis for his opinion that this case is unsuitable to a contingency fee agreement. In the main, he asserted that PLFN seeks declaratory and injunctive relief aimed to have Boat Harbour cleaned up and the waste water facility shut down. Accordingly, he argued, a settlement suitable to his clients might very well not involve any damages. In addition, Mr. Hebert noted that because PLFN received $35 million in their 1993 Settlement Agreement with the Government of Canada, there are legal concerns regarding double recovery and limitation defences, especially as they relate to damages. [32] With respect, I find these arguments lacking as against the backdrop of the jurisprudence. [33] In Little Sisters, the Court expressly stated that an attempt be made to obtain a contingency fee agreement with counsel (para. 40). Chief Paul’s Affidavit says merely that Mr. Hebert’s opinion is that “the lawsuit is not suitable for a contingency fee agreement”. [34] In Traverse v. Government of Manitoba, 2013 M.B.Q.B. 150, the native claimants complained of flooding, and sought advance costs to pursue their case. They were denied advance costs. Among other things, the Court found the band “failed to demonstrate they fully explored the idea of a contingency fee agreement”(para. 67). The Court also stated: 65 There is no evidence before me of the First Nation’s efforts to solicit counsel for the order for interim costs. I do not know if there are counsel prepared to provide their legal services for a rate that may be lower than what counsel suggest in paragraph 83 of their brief. There is nothing before me to suggest that the counsel the plaintiffs have recently retained are indispensable to the claim going forward, such that it would be cost prohibitive to switch counsel. I am not making any comment on counsel or their requested fees. I am saying I know nothing of what has occurred to find comparable legal representation. [35] There is nothing to suggest here that other lawyers were approached in relation to either lower fees, or contingency fees. [36] There is no evidence that “partial contingency fee agreements” as discussed in Lloyd v. Imperial Oil Ltd. (2001) 289 AR 293, were canvassed by PLFN. Counsel for PLFN has simply asserted that a contingency agreement is not “suitable.” Further, the suggestion that a contingency fee is not realistic because the remedy is primarily non-monetary, is not consistent with PLFN’s demand for extensive damages (Statement of Claim, para. 133, (rr), (ss)). [37] It also emerged during Chief Paul’s cross-examination that $100,000.00 from the Trust Fund was approved to pay PLFN’s lawyer for the within application. In argument, Mr. Hebert made the point that considerable funds were required to position PLFN to make this Motion. He affirmed that, although it was somewhat uncertain, PLFN’s litigation budget was in the order of $8 million and that the seven page document (Exhibit 42 of Chief Paul’s first affidavit) was an accurate estimate of litigation expenses. [38] Given the above, income from the Boat Harbour Trust Fund has already been accessed to fund this litigation. Apart from the fact that PLFN has competing priorities for its funds, it is not clear that the trust income and/or capital cannot be accessed to fund the entirety of the lawsuit. If there is merit in the lawsuit - and this remains to be determined - then investing in the action may well be in furtherance of the interest of all the citizens of PLFN. [39] Concerning the Band’s land holdings, Chief Paul confirmed when she was cross-examined that PLFN owns approximately 900 acres of woodland. She agreed that the land was for the Band, “... to do with as we please.” In the context of this Motion, it is clear the land has not been harvested or sold. [40] With respect to PLFN’s private real property holdings, they have an assessed value of approximately $1.6 million. There was no evidence to the effect that PLFN in their approach to the Bank of Montreal, asked if a mortgage loan on the security of that property would be possible. Furthermore, no other lending institutions were canvassed. As for the Lexfund, in their September 23, 2010 letter to PLFN’s counsel, it is noted the company is not “currently” considering submissions. There is no follow-up correspondence. [41] There is a similar lack of follow-up in respect of the Band’s approach to Indian and Northern Affairs Canada-Atlantic. In their March 10, 2011 letter, it is stated that if PLFN wishes “to pursue this possible funding source further ...,” their Manager of Test Case Funding should be contacted. No further contact was made in respect of this potential funding source. [42] In his written submission, Northern Pulp’s counsel characterized PLFN’s evidence as follows: 29. The evidence with respect to impecuniosity is presented in the Affidavit of Chief Andrea Paul sworn November 6, 2013. The evidence of Chief Paul in this respect comprises a series of conclusions and attached documents such as financial statements. The impecuniosity section fo Chief Paul’s affidavit (para. 81, et seq.) Gives the appearance of an exercise in ‘box ticking.’ The ‘boxes are those possible funding sources identified in the cases. The ‘ticks’ are the negative responses received. For example, para. 87 refers to the letter from the Nova Scotia Legal Aid Commission denying funding which is attached as Exhibit ‘50'. Paragraphs 88 and 89 are similar. The receipt of one negative response apparently means that that source of funding is completely foreclosed and the requisite ‘box’ may be ticked. The affidavit does not state that other sources of funds in a particular category such as Bank Financing were approached. Canada has many financial institutions but chief Paul refers to only one, the Bank of Montreal. [43] Having regard to the written and viva voce evidence of both Chief Paul and Mr. MacDonald, I find Mr. Morrison’s argument to be persuasive. On balance, and mindful of the Supreme Court of Canada’s commentary in the trilogy of cases, I find PLFN did not exercise the kind of due diligence to demonstrate it is impossible to proceed without an award of advance costs. [44] In all of the circumstances, PLFN have not satisfied me that they have met the first requirement of the Okanagan test. In the result, I do not find it necessary to go through the other criteria of the Okanagan Test. Accordingly, on the basis of PLFN’s inability to meet the first element of the Okanagan Test, I dismiss the Motion for advance costs in its entirety. Chipman, J.