Canada (Attorney General) v Cold Lake First Nations: Transparency is Not a Top-Down Approach

First Nations and the Harper Government

First Nations in Canada have reason to be hopeful in light of national and legal developments this past week. In the federal election on 19 October 2015, some First Nations communities saw their voter turnout increase by as much as 270%. This increase in turnout happened despite the Conservative government’s Fair Elections Act, SC 2014, c. 12, which made voting harder without approved identification. In addition, ten Aboriginal Members of Parliament were elected to the House of Commons—a positive step in bringing First Nations issues closer to the attention of the federal government.

Most importantly, Stephen Harper’s Conservative government is no longer in power. Ten years of Conservative power has been detrimental for Canada’s relationship with First Nations. The Conservative-sponsored Bill C-51 was seen by many as criminalizing First Nations activists. The Harper government also cut funding to Aboriginal organizations; weakened environmental protections that impact First Nations lands; and passed the First Nation Financial Transparency Act, SC 2013, c C-7 [FNFTA], which many First Nations opposed. The enforcement of the FNFTA was the subject of Canada (Attorney General) v Cold Lake First Nations, 2015 FC 1197 [Cold Lake], which saw the Federal Court (“FC”) declare that the federal government should not enforce the FNFTA while legal challenges to its validity are pending.

The FNFTA requires that First Nations make their audited consolidated financial statements and remuneration available to the public, in addition to the usual reporting to the federal government. Despite dissatisfaction with the way the FNFTA was passed, 99% of the 581 First Nations in Canada required to submit financial statements under the FNFTA did so in 2014. According to a recent Toronto Star report, however, 197 First Nations (or 34%) did not comply with the filing requirements in 2015.

Facts

In Cold Lake, the FC was faced with two motions brought by Sawridge First Nation (“Sawridge”) and Onion Lake Cree Nation (“Onion Lake”) respectively. Sawridge has had an amicable relationship with the Department of Aboriginal Affairs and Northern Development Canada (“the Department”). Sawridge regularly disclosed its financial statements to the Department with the understanding that the information would be confidential (Cold Lake, para 3). In 2013, Sawridge had objected to the passing of the FNFTA. Sawridge was comfortable with the practice of publicly accounting for its public funding but objected to the public disclosure of the financial affairs pertaining to the Band’s private commercial operations (para 4).

As such, Sawridge elected not to comply with the reporting requirements of the FNFTA. In December 2014, the Department filed an originating application seeking an order compelling Sawridge to comply with the disclosure requirements (para 6). The Department also issued a press release announcing it would withhold funding for “non-essential” programs for First Nations that did not comply with FNFTA (para 5). In response, Sawridge filed a motion in the Court of Queen’s Bench of Alberta (“ABQB”) challenging the constitutional validity of the FNFTA based on Sawridge’s asserted Aboriginal and treaty rights, a breach of fiduciary obligation, breach of its right to self-govern, a breach of the duty to consult, and a violation of the equality provisions guaranteed by section 15 of the Charter (para 6).

In the case of Onion Lake, an affidavit of the First Nations’ Chief stated that the Department had withheld funding to the community in the amount of $1,034,017.52 in relation to benefits payable to its employees as a result of non-compliance with the FNFTA (para 8). Onion Lake initiated legal action against the federal government, claimed damages and inductive relief based on allegations of Charter-based discrimination, failure to consult, breach of fiduciary duty, and breach of promises in relation to Treaty 6 (para 9).

Analysis

Sawridge and Onion Lake asked for injunctive relief in the form of an exemption from the statutory disclosure provision in the FNFTA pending the resolution of the legal issues raised before the ABQB. In the alternative they asked for a stay in the Department application pending the outcome of their legal challenges to the FNFTA under subsection 50(1) of the Federal Courts Act, RSC 1985, c F-7 [FCA]. Justice Barnes of the FC found that there was considerable overlap in the legal issues that would be material to the outcome of the two actions and the application, and that the issues would involve the development of a considerable evidentiary record (para 19).

More importantly, the FC found that the Department was warned that the constitutional validity of the FNFTA would be challenged (para 23). Justice Barnes stated that the Supreme Court of Canada (“SCC”) has repeatedly held that disagreements of the sort raised in these legal proceedings should be subject to consultation and accommodation (para 24). Even though the Minister of Indian Affairs and Northern Development’s (“Minister”) powers to enforce action against the First Nations was discretionary and authorized by the FNFTA, the greater public interest favours the First Nations and their right to move forward with their litigation (para 26). For this reason, the FC stayed the Minister’s application.

Onion Lake also sought mandatory relief requiring the Minister to reinstate the benefits that were withheld—but the FC cautioned against this approach. The relief Onion Lake asked for was found to interfere with validly enacted legislation (para 29). The test for interim injunctive relief requires the proponent to establish a serious issue, irreparable harm, and that the balance of convenience favours the grant of relief (para 31). The Crown had already conceded that the case at hand was a serious issue. Justice Barnes, however, did not find that Onion Lake had made out a case for irreparable harm (para 32). The FC distinguished the cases of Haida Nation v Canada, 2015 FC 290 and Wahgoshig v Ontario, 2011 ONSC 7708. In these cases, the failure of the Crown to consult before action was found to have the potential to cause irreparable harm because there was evidence of material harm (para 38).

Ultimately, Justice Barnes explained that the denial of relief was based only on the paucity of evidence of irreparable harm—and was not an endorsement of the actions of the Department (para 40). The Crown’s failure to consult before withholding funding will likely to be considered in the face of evidence for the cases going forward (para 40).

Financial Transparency in the Future

A challenge to the FNFTA based on Charter and treaty rights violations can go forward, but it need not necessarily play out through the courts. During the election, the now government-elect promised that it would repeal the FNFTA and replace it with something more respectful to First Nations. If the new government wants to develop a closer relationship with First Nations, they should stop spending money on litigation with First Nations and instead invest that money in more programs and better opportunities for reconciliation. A 2015 report by the Department outlined that in the past five years alone, the federal government had spend $100 million on First Nations-related litigation and is currently involved in 452 cases involving section 35 of the Charter. Whether the new government will go through with its election promises remains to be seen—but a better relationship certainly should not have to be mandated by the courts.