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The past 40 years has seen a remarkable evolution in the recognition, definition and scope of Aboriginal Rights, Aboriginal Title and Aboriginal Treaty Rights in Canada. This process is ongoing with many significant issues of public interest before the Courts. These cases arise in a variety of contexts but almost invariably they share a common characteristic: they are very expensive to litigate, so much so that claims with significant merit, languish or are abandoned from the lack of financial resources necessary for their advancement.

This paper will examine the Court’s jurisdiction and willingness to award advanced interim costs, known as an “Okanagan Order”, to assist in the advancement of public interest litigation where aboriginal rights may be at issue. This exceptional remedy remains under-utilized largely because of the reluctance of the Court to open the door more than a crack, to depart from the traditional approach to costs except in the most rare and exceptional circumstances. This relief, if more readily utilized, has the potential to transform the legal landscape by ensuring access to the Courts where significant public law issues are at stake. Economic times are tough, and the availability of this remedy and the willingness of the Courts to embrace it may be critical to not only the development of the law but also to protection of rights including constitutional rights.

Traditional Approach to Costs

Most civil litigation in Canada operates on a “loser pay” basis; that is, the successful party in the lawsuit may recover all or part of his or her costs of the litigation from the unsuccessful party, subject to the discretion of the Court. Some jurisdictions have specific provisions that deviate from that general principle in particular types of cases. For example, the Manitoba Class Proceedings Act, expressly provides that no costs may be awarded against any party with respect to any stage of a class proceeding unless the Court finds that such costs are warranted because of frivolous, vexatious or abusive conduct, unnecessary steps being taken or exceptional circumstances make it unjust to deprive the other party of costs.[1] Absent a special provision contained in the statute applicable to a particular proceeding, the usual rule is that costs follow the event.

Beginning in the late 13th century, English Common Law Courts were given power by statute to order costs in favour of a successful party. Courts of Equity always had the discretion to order costs according “the dictates of conscience”. [2]  With the merger of the Courts of Equity and Common Law, Canadian courts have both a statutory right to determine whether costs should be awarded and the amount or scale of such costs, as well as an inherent jurisdiction to make such orders as are appropriate to the circumstances of the case.[3]

Typically, costs are only awarded once the outcome of the particular proceeding or action is determined.  Thus, costs follow the outcome of the Motion, Application or Trial. In Re Regional Municipality of Hamilton-Wentworth and Hamilton-Wentworth Save the Valley Committee, Inc., the Ontario Divisional Court summarized the standard characteristics of a costs award as follows:

“1.   They are an award to be made in favour of a successful or deserving litigant, payable by the loser.

2.    Of necessity, the award must await the conclusion of the proceeding, as success or entitlement cannot be determined before that time.

3.     They are payable by way of indemnity for allowable expenses and services incurred relevant to the case or proceeding.

4.     They are not payable for the purpose of assuring participation in the proceedings.”[4]

Thus, in Canada, a litigant bears not only the expense of their own lawyer’s fees and the disbursements incidental to the claim, he or she also bears a risk that if unsuccessful, liability will follow to pay all or part of the other party’s costs.  This risk can be significant especially where there are multiple Defendants and the litigation involves issues that are factually and/or legally complex.  The risk of adverse costs in long trials is not for the faint of heart.

Underlying Principles

The traditional purpose of an award of costs is to indemnify the successful party for their expenses sustained either in defending the action or in pursuing the claim. The underlying rationale is that the unsuccessful Plaintiff should never have pursued the claim because at the end of the day, the claim has been determined to be unfounded. Likewise, the unsuccessful Defendant should indemnify the Plaintiff in respect of expenses that the Plaintiff had to incur to pursue his or her meritorious claim as a result of the Defendant’s wrongdoing. The Defendant should never have put the Plaintiff to that expense and so should be obligated to contribute to those costs.

The Rules of Court in Canadian jurisdictions spell out various criteria that the Court is to consider in determining whether to award costs and in what amount or at what scale. These factors include but are not limited to:

a) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

b) The amount claimed and the amount recovered in the proceeding;

c) Any apportionment of liability;

d) The complexity of the proceeding;

e) The importance of the issues;

f) The conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding;

g) Any step in the proceeding that was improper, vexatious or unnecessary;

h) A party’s denial of or refusal to admit something that should have been admitted; and,

i) The experience of the lawyer for the party that was successful. [5]

Notwithstanding the general rule that the winning party is entitled to recover costs from the losing party, the power to actually order costs remains discretionary. That discretion must be exercised judicially so that the ordinary rule of costs should be followed unless circumstances justify a different approach.[6]

The Courts in Canada have recognized that while the principle of indemnification is an important consideration, it is not the only consideration. The Courts will use an award of costs to encourage settlement, to deter frivolous actions and defences and to discourage unnecessary steps in the litigation.[7]

Most jurisdictions also have provisions by which a greater scale of costs can be awarded to a successful party whose offer to settle was exceeded but rejected by the unsuccessful party. For example, the Plaintiff was willing to settle for $100,000 and made a formal offer which the Defendant rejected. The matter proceeded to trial where the Plaintiff recovered $125,000. In several jurisdictions, the Court can and often does award a greater percentage of cost recovery from the date of the offer forward to penalize the Defendant for its imprudent failure to accept the Plaintiff’s offer. Even where the Rules provide for such penalties, a discretion remains in the trial Judge to award a lesser scale if the circumstances warrant.

In broad terms, the cost regime in Canada is intended to accomplish the following goals:

1. To ensure that the justice system works fairly and efficiently by penalizing those who do not act reasonably or efficiently; and,

2. To ensure access to justice so that Defendants with deep pockets cannot deter litigation by making the cost to litigate so out of proportion with the amount in dispute that the aggrieved party is left with no real remedy.

Access to justice in many jurisdictions, including those in Canada, is a pressing concern. The Courts are over-burdened by the sheer volume and complexity of claims being advanced. Costs are one way by which the Courts seek to balance the need for judicial economy with access to justice concerns.

In Canada, the Courts have also recognized that in some circumstances, the traditional rules with respect to costs simply should not apply because of the harshness that may result from strict adherence to traditional principles. This is especially so where the claim being advanced is one that transcends the specific interests of the individual litigation and has broad implications for the public at large.[8]

In Re Lavigne and Ontario Public Service Employees Union (No. 2), the Court found that it was desirable the Charter (Constitutional) litigation not be beyond the reach of the citizen of ordinary means. In that case, the Court awarded costs to a successful applicant in spite of the fact that his representation had been paid for by a third party organization which, on the traditional approach of indemnification, would not have entitled him to any recovery.[9]

In B. (R.) v. Children’s Aid Society of Metropolitan Toronto, the Applicants unsuccessfully argued that their Charter (Constitutional) rights had been violated when a blood transfusion was administered to their infant daughter over their objections. Despite being unsuccessful, the Court ordered the Defendant to pay the Applicants’ costs because the unusual facts in that case raised issues that were a matter of Province-wide importance.[10]  In that case, the Appellate Court noted that the case was one where the parents rose up against state power because of their religious beliefs and raised issues which were of national or even international significance. The decision was upheld by the Supreme Court of Canada which noted that such awards should only be permitted in very rare cases.[11]

Awards of Interim Costs

There are two types of interim costs:

1. Those which are awarded by the Court at the conclusion of a particular step in an action such as a motion; and,

2. The more rarely used advanced interim costs.

An award of advanced interim costs violates the fundamental precept that costs should only be awarded once the outcome of the step in the proceeding or action is known. While there is historical precedent for granting such relief, it is rarely exercised and only in special or exceptional circumstances.

In Organ v. Barnett, the Court reviewed the origins of the use of this discretion and concluded that the Court’s general jurisdiction to award interim costs should be limited to “very exceptional cases” and should be narrowly applied given that the Court is asked to essentially predetermine an issue.[12]  This rarely exercised power has been used predominantly in family law cases where virtually all of the assets and resources are vested in one party thereby putting the impecunious spouse at a significant disadvantage. The willingness to embrace this remedy in these circumstances may be more understandable given the well-settled law with respect to the division of matrimonial assets. The Court may well expect that such an anticipatory award of costs is a likely outcome in any event, and leveling the playing field will ensure both access to justice and promote settlement.

Although the Courts exercised this general discretion to award advance interim costs in a narrow subset of cases, its availability remained largely unresolved in cases where the action raised significant issues of public interest. In B. (R.) v. Children’s Aid Society of Metropolitan Toronto, the award of costs to the unsuccessful parents was made only after the outcome of the action was known. Relieving an unsuccessful party from their exposure to costs or even awarding costs to the unsuccessful party where matters of significant public interest are involved does not assist that party in being able to advance the claim meaningfully before the outcome is known. The reality of public interest litigation is that the stakes are high, experts are often required and rare indeed are those counsel who are prepared to champion a case with no money coming in to assist with overhead costs. These cases often involve governments, Federal or Provincial, who have seemingly limitless resources by virtue of their access to public monies.

In British Columbia (Minister of Forests) v. Okanagan Indian Band, the Supreme Court of Canada recognized that in public interest litigation special considerations come into play. These cases can be distinguished from ordinary civil disputes. They may be viewed as a subcategory of those special circumstances that may justify the exercise of the Court’s discretion to award advanced interim costs because of the public importance of the questions at issue in the case.

By way of background, in the Fall of 1999, members of four First Nations began logging on Crown land in British Columbia without authorization under the Forest Practices Code of British Columbia. The Tribal Councils of the four First Nations authorized the harvesting of the timber, which was to be used to construct housing on the First Nations’ Reserves. The Minister of Forests served the First Nations with stop-work orders under the Code, and commenced proceedings to enforce the orders. The First Nations claimed that they had aboriginal title to the lands in question and were entitled to log those lands. They filed a Notice of Constitutional Question challenging the provisions of the Code as conflicting with their constitutionally protected aboriginal rights.

The Minister applied under the Rules of Court in British Columbia to have the matter remitted to the trial list instead of being dealt with in a summary manner. The First Nations argued that the matter should not go to trial because they lacked the financial recourses to fund what was anticipated to be a protracted and expensive trial. They argued that given the evidentiary challenges of proving a claim of aboriginal title, the trial would undoubtedly be a lengthy and complex one. In the alternative, the First Nations asked the Court to require,  as a term of the order remitting the matter to the trial list, that the Minister pay their legal fees and disbursements in advance and in any event of the cause (i.e. regardless of the outcome).

In support of their position, the First Nations submitted evidence demonstrating that it was impossible for them to fund the litigation themselves. Each of the First Nations was in an extremely difficult financial situation. The Affidavits showed that the communities faced grave social problems, including high unemployment rates, lack of housing, inadequate infrastructure and a lack of access to education. The First Nations had been forced to run deficits to finance their day-to-day operations and two the First Nations deposed that they were on the verge of third party management.

Counsel for the First Nations estimated the cost of the full trial would be $814,000. The evidence of the First Nations was that they had no way to raise such money and that even if they could, the other pressing social issues facing their community were such that they would take priority over the funding of the litigation.

The lower Court initially found that its jurisdiction to make such an order was very narrow and was limited by the principle that it could not pre-judge the outcome of the case. As liability was still an issue, the Judge hearing the motion held that ordering payment of costs in advance would amount to pre-judging the case on the merits.[13]

The motions Judge was not unsympathetic to the First Nations’ plight and recommended that the Federal and Provincial Crown consider providing funding to ensure that the cases, which had elements of test cases, be properly resolved at trial.[14]  In other words, he called upon the Governments to “do the right thing”.

In the British Columbia Court of Appeal, the Court recognized that the First Nations’ claims, if they went to trial, would be the first to try Aboriginal claims to title and other rights in respect of logging in British Columbia. The Court distinguished between full funding on the one hand and “costs” which ordinarily represent a fraction of the actual expense that a litigant incurs to advance their own claim or defence. The Court of Appeal agreed that the motions Judge could not order the Defendants to prepay all of the First Nations’ legal fees and disbursements. However, the Court found that it was within the general discretion of the Court in these unusual and exceptional circumstances to order the Defendants to make one or more advance payments of costs in amounts to be determined by the Court as the litigation progressed with the Court acting as overseer to ensure that unnecessary steps were not taken, proceedings were conducted efficiently and only such moneys advanced as were reasonably necessary to allow the Plaintiffs to advance their claims.[15]

In the Supreme Court of Canada, the Court articulated three mandatory criteria to govern the exercise of this extraordinary discretion:

1. Impecuniosity: the party seeking the order must be impecunious to the extent that, without such an order, that party would be deprived of the opportunity to proceed with the case.  The moving party must provide evidence that it genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing the issues to trial;

2. Prima facia case: the claim to be adjudicated is prima facia 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; and,

3. Public importance:  the issues raised transcend the individual interests of the particular litigant, are of public importance, and have not been resolved in previous cases.[16]

All three criteria must be met. However, even where such criteria are satisfied, the Court retains a residual discretion to refuse to grant the advanced interim costs order. Further, the Court may set such terms as are necessary in the view of the Court to ensure that this privilege is neither wasted nor abused.

Subsequent cases have demonstrated just how rare and exceptional the exercise of this discretion is. In Little Sisters Book and Art Emporium v. Canada, the Supreme Court of Canada reiterated that advanced cost awards are exceptional and should only be granted where the need for them is clearly established.[17]  The Court held that bringing an issue of public importance to the Court does not automatically, entitle a litigant to preferential costs treatment. Public interest advanced costs orders must be granted “with caution”, as a last resort, in circumstances where their necessity is clearly established.[18]  The Court held:

“An application for advance costs may be entertained only if a litigant establishes that 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 the litigation fairly between the parties.”[19]

The Little Sisters decision confirms that it is only the “rare and exceptional” case that is special enough to warrant an advanced cost award. The standard to obtain such an award is high. While there is no rigid test that can be applied systematically to determine whether a case is “special enough”, the following non-exhaustive factors should be considered:

1. The injustice that would arise if the application is not granted must relate both to the individual applicant and to the public at large. The justice system is not a proxy for a public inquiry process, to be swamped by actions launched by test Plaintiffs and public interest groups;

2. An advanced costs award must be in the interest of justice. The Applicant must explore all other funding options including legal aid and other programs designed to assist various groups in taking legal action. An advanced costs award is neither a substitute for, nor a supplement to these programs. The Applicant must demonstrate that an unsuccessful attempt has been made to obtain private funding through various sources including contingency fee agreements;

3. The applicant must be prepared to contribute that which it can to the cost of the litigation;

4. The Courts should consider whether other litigation is pending that may be conducted for the same purpose which does not require an interim order for costs;

5. The can be no injustice if the matter at issue could be settled or the public interests could be satisfied without an advanced costs award;

6. These awards should not be used in such a way that they encourage purely artificial litigation; and,

7. The Court must set reasonable limits and exert reasonable control over the funds to be advanced.[20]

The Court in Little Sisters wrote:

“A Court awarding advance costs must be guided by the condition of necessity. For parties with unequal financial resources to face each other in Court is a regular occurrence. People with limited means all too often find themselves discouraged from pursuing litigation because of the cost involved.  Problems like this are troubling, but they do not normally trigger advanced costs awards. We do not mean to minimize their unfairness. On the contrary, we believe they are sufficiently serious that this Court cannot purport to solve them all through the mechanism of advanced costs awards. Courts should not seek on their own to bring an alternative and expensive legal aid system into being. That would amount to imprudent and inappropriate judicial overreach.” [21]

The admonishment of the exceptional nature of interim advanced costs has certainly resonated in the cases that have been decided since the Little Sisters decision in 2007. In Fontaine v. Courchene and Sagkeeng (Fort Alexander) First Nation, the self-represented Plaintiff sought an order for the payment of interim costs to fund her action in defamation against a former First Nation Councillor and the First Nation itself. In that case, the Court found that the Plaintiff’s motion failed to meet any of the criteria and, in particular, failed to show why her claim transcended her individual interest in seeking recovery for damages arising from defamation.[22]

In Dish Network L.L.C. v. Rex, the British Columbia Court of Appeal overturned a lower Court decision that granted an award of advanced interim costs to the Defendant. The Defendant sought to advance a constitutional challenge to Canadian laws that prohibited so called “grey market” entrepreneurs who were intercepting and decoding encrypted televisions broadcasts. The British Columbia Court of Appeal found the Defendant’s constitutional challenge one with little merit, much less one that could meet the stringent test for an award of advance interim costs.[23]

In 2013, the Manitoba Queen’s Bench rejected a motion brought by Chief and Council of the Lake St. Martin First Nation as against the Governments of Manitoba and Canada for an interim award of costs to fund a claim for damages arising from flooding that took place in the 1990’s and earlier on their Reserve. The Court was especially critical of the Plaintiff’s failure to provide salient information with respect to its finances, its efforts to seek funding and its efforts to obtain representation through contingency agreements. The affiants lacked detailed knowledge and understanding of the First Nation’s financial circumstances and its efforts regarding financing.  Further, the material filed with the Court failed to provide a reasonable estimate of the anticipated costs of advancing the litigation. The Court found that the material before it was inadequate to satisfy the impecuniosity requirement.[24]

The decisions of Canadian Courts readily accept that they have the jurisdiction to make an order directing a party to pay in advance costs to the opposing party. Because this measure is counter-intuitive in that it makes a party pay before they have lost, the Courts reason that such awards must arise fromnecessity, be restrictively allowed and restrictively enforced. The Courts require substantial and compelling evidence to satisfy each of the three requirements and even where such substantial and compelling evidence is provided, there is no guarantee that an advance award will be made.

Aboriginal communities in Canada face a wide range of legal, financial and social problems. Their financial circumstances are as varied as their physical location and the resources available to them. Not every Aboriginal right or treaty claim will meet the test for public interest.  Not every First Nation will meet the impecuniosity test; in fact, it seems likely that many First Nations do have the resources to pursue these claims or to pursue these claims in concert with other First Nations by pooling their resources and interests.

Nevertheless, the Supreme Court of Canada has held out hope, however faint, that meritorious claims that raise matters of public interest advanced by impecunious Plaintiffs may allow for an interim advanced award of costs to ensure access to justice. For many Aboriginal groups, this rare and exceptional remedy is their only hope that their issues will be litigated and precedents set that will benefit not only them but other Aboriginal groups and society as a whole. There is significant benefit to a society that ensures fair, impartial and timely determination of important issues affecting those most disadvantaged.


This paper has attempted to examine one tool in the tool box available to protect and assert indigenous rights through the Courts. In difficult economic times, the need to do more with less creates its own barrier to access to the Courts. An award of advanced interim costs offers hope and a means to advance important issues.

[1] Class Proceedings Act, C.C.S.M. c. C.130, section 37(1) and (2).

[2] M.M. Orkin, The Law of Costs (2nd Ed. (Loose Leaf)) at page 1-1

[3] British Columbia v. Okanagan Indian Band, [2003] 3 S.C.R. 371 at para. 19.

[4] Re Regional Municipality of Hamilton-Wentworth and Hamilton-Wentworth Save the Valley Committee, Inc. (1985), 51 O.R. (2nd) 23 at page 32.

[5] Ontario Rules of Civil Procedure, Rule 57.01

[6] British Columbia and Okanagan Indian Band, supra, at para 22

[7] British Columbia and Okanagan Indian Band, supra, at paras 22 and 23

[8] British Columbia and Okanagan Indian Band, supra, at para 27

[9] Re Lavigne and Ontario Public Service Employees Union (1987), 60 O.R. (2nd) 486 (H.C.J.) at page 526

[10] B. (R.) v. Children’s Aid Society of Metropolitan Toronto, [1995] 1 S.C.R. 315

[11] B. (R.) v. Children’s Aid Society of Metropolitan Toronto, supra, at para 122

[12] Organ v. Barnett (1992), 11 O.R. (3rd) 210 (Gen.Div.) at page 215

[13] British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, para 10.

[14] British Columbia (Minister of Forests) v. Okanagan Indian Band, supra para 10

[15] British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, paras 16 and 17

[16] British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, para 40

[17] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), [2007] 1 S.C.R. 38, para 37.

[18] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), supra, para 36

[19] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), supra, para 36

[20] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), supra, paras 39-42

[21] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), supra, para 44

[22] Fontaine v. Courchene and Sagkeeng (Fort Alexander) First Nation, 2007 MBQB 238, para 27

[23] Dish Network L.L.C. v. Rex, 2012 BCCA 161 para 2.

[24] Traverse et al. v. Government of Manitoba and A.G. of Canada, 2013 MBQB 150, paras 4-6