The SCC has recently addressed the test for “advanced costs” in the Anderson case, which involved an Indigenous government alleging treaty breaches by the Crown. To afford the litigation, the Indigenous government sought to have its litigation expenses funded by the Crown, which the Crown opposed. The court decided that the “test” for a court to order “advance costs” is very stringent, although this stringency is not so strict that indigenous governments are expected to forego the “pressing needs” of their people. This stringency requires, however, that Indigenous governments adduce detailed evidence of, among other things, the costs of their unmet needs: Anderson v. Alberta, 2022 SCC 6 (”Anderson”).
As set out in more detail below, the Anderson case represents a blow to government’s narrow conception in that case of what impecuniosity means. On the other hand, it also illustrates the onerous hurdles that Indigenous governments will face when seeking advanced costs.
- First, the case illustrates the litigation risks — in terms of money, time, and effort — that Indigenous governments may face when seeking advanced costs at all. In this case, the advanced costs issue went through three levels of court, and is still not resolved.
- Second, the case highlights the intensive level of scrutiny that Indigenous governments will automatically face, since they must prove not only that they lack resources to litigate about Crown conduct, but also, essentially, they are not at fault for lacking the resources.
Legal background: In 2003, the Supreme Court of Canada first set out basic principles for when courts may order that litigants receive “interim costs” (or advanced costs) so that they may fund litigation. While the principles apply to all requests for interim (or advanced) costs, that case involved Indigenous litigants asserting aboriginal title as a basis on which they could harvest timber from (ostensibly Crown) land, to build housing on their reserves: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 (CanLII),  3 SCR 371. The court recognized that it had discretion, arising from its equitable jurisdiction (at para. 35), and identified three key requirements (at para. 36):
- First, “[t]he 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.”
- Second, “[t]he claimant must establish a prima facie case of sufficient merit to warrant pursuit.”
- Third, “there must be special circumstances sufficient to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its powers is appropriate.” The SCC went on to say that such special circumstances include situations where, “[40(3)] The issues raised transcend the individual interests of the particular litigant, are of public importance, and have not been resolved in previous cases.”
The Anderson case: In Anderson, the SCC grappled with what “impecunious” means in the context of Indigenous governments, who may have access to funds, but must also use those funds for pressing concerns, such as housing.
Background: Anderson involved a claim by Beaver Lake Cree Nation (”Beaver Lake”), a signatory to Treaty 6, which in 2008 commenced an action against the Crown, based on the Crown improperly allowing lands to be taken for industrial and resource management. Given an impending 120-day trial estimated to cost Beaver Lake $5 million, a case management judge ordered advance costs to Beaver Lake. The Alberta Court of Appeal reversed that order, as Beaver Lake had access to more than $3 million in unrestricted funds and ongoing revenue, and had also received $2.97 million in settlement of a specific claim. Beaver Lake appealed, however, on the basis it had to apply those funds to various pressing needs.
Outcome: The SCC held that the Court of Appeal should not have found against Beaver Lake’s impecuniosity, as the court must assess impecuniosity with a view to what Beaver Lake considers as pressing needs for its people. However, the court sent the matter back down to the case management judge, based on a lack of sufficient evidence concerning the cost of meeting Beaver Lake’s needs, the resources available to meet those needs, and any resources left over for litigation. Accordingly, advance costs must be decided again.
Here are some of the court’s key findings:
The role courts and advance costs: The Okanagan case did not establish access to justice as a paramount consideration.  Advance costs do not create a parallel system of legal aid; it is for Parliament and provincial legislatures to determine if public funds are to determine if and how public monies will be used to fund litigation against the Crown.  Accordingly, a court’s discretion to award advance costs must be a “last resort” and reserved for where a court would be participating in an injustice by declining to exercise its discretion to order advance costs. [21 and 23]
Assessing impecuniosity in the context of Indigenous governments: The court reiterated that the “two purposes” of s.35 (of the Constitution Act, 1982) are “to recognize the prior occupation of Canada by organized, autonomous societies and to reconcile their modern- day existence with the Crown’s assertion of sovereignty,” and that “[t]he [t]he same purposes are reflected in the principle of the honour of the Crown, under which the Crown’s historic assertion of sovereignty over Aboriginal societies gives rise to continuing obligations to their successors as part of an ongoing process of reconciliation.”  In this context, when assessing impecuniosity and whether a First Nation government “genuinely cannot afford to pay”, a court must account for the broader context in which First Nations governments make financial activities. 
The court declined to alter the “impecuniosity” test. [33-35] However, the court clarified that it could take judicial notice of such matters as “the history of colonialism, displacement, and residential schools and how that history continues to translate into lower educational attainment, lower incomes, higher unemployment, higher rates of substance abuse and suicide, and of course higher levels of incarceration for Aboriginal peoples.” The court could also take judicial notice of such matters “insofar as they may be relevant to understanding a First Nation government’s financial situation and spending priorities.”  Accordingly, “it is open to a court to decide that a First Nation government is impecunious when its prioritization of ‘pressing needs’, properly understood, has left it unable to fund public interest litigation.” 
The court clarified that, “ …[w]here an applicant has access to financial resources that could potentially be used to pay for the litigation, it bears the onus of proving that it genuinely cannot afford to pay for the litigation because it must commit those resources to address other pressing needs.” Undoubtedly, “ … expenditures on basic necessities of life, including adequate housing, a safe water supply, and basic health and education services, rise to the level of addressing a pressing need. Spending to improve standards of living, for example, to provide enhanced health and education services or to promote cultural survival, may also qualify. But a court must consider the pressing needs of a First Nation government that sets its own priorities and is “best situated to identify its needs.”  Accordingly, some expenditures might not appear to a court to address a pressing need, but a community might adduce evidence showing that it has prioritized a project because it promotes its Indigenous identity, or address an urgent problem of youth in crisis. 
The need for evidence: Despite this expanded definition of impecuniosity, the burden still lies on the Indigenous government to provide enough evidence for a court to “(1) identify the applicant’s pressing needs; (2) determine what resources are required to meet those needs; (3) assess the applicant’s financial resources; and (4) identify the estimated costs of funding the litigation.” [5 and 41]
The court held that the record was not sufficient for the court to award advance costs. For example, “there was no specific account of how much it would cost to address Beaver Lake’s pressing needs, or why no other resources were available to meet those needs.”  The court held it required “evidence that quantifies the financial resources required to meet the First Nation government’s pressing needs.”  Further, the court also said that, “[I]t would also be helpful if Beaver Lake were to provide a more detailed account of its efforts to obtain funding from alternate sources.”  For example, since Beaver Lake was approved to become a borrowing member of the First Nations Finance Authority, the court wished to know whether it has sought to obtain a loan to pursue litigation. 
Accordingly, the court allowed Beaver Lake’s appeal, but remitted its application back to the Court of Queen’s Bench of Alberta.
While the evidential burden set by the court seems, in the abstract, a logical requirement for a plaintiff seeking a government benefit in the form of funding, the circumstances of Indigenous governments involve some special factors that seem to make the advanced costs test too arduous.
First, in practice, an Indigenous government seems likely to face the Crown questioning the necessity of any and all spending by an Indigenous government, and assertions that litigation would surely be affordable if only the nation were to refrain from spending money on this or that. Addressing such a position essentially requires that any Indigenous government seeking advanced costs justify every aspect of its financial position and spending.
Second, reconciliation requires that the Crown provide adequate funding — whether through courts, or through “legal aid” programs — relating to Indigenous rights and treaty rights, especially in the context of asserted aboriginal title. The limited financial resources of Indigenous governments in BC, for example, may be traced directly to, among other things, the Crown having stripped Indigenous peoples of their traditional territories. This stripping of lands began with, and is still sustained by, a discriminatory legal presumption that their lands could be subject to Crown assertions of sovereignty, and that their lands are Crown lands (even without a treaty), unless and until Indigenous peoples prove their aboriginal title in a Crown court. The very need for Indigenous groups to litigate to recover any part of their traditional territories is perverse, and this perversity is exacerbated by the enormous resource costs that such litigation requires.
Anderson v. Alberta, 2022 SCC 6 (”Anderson”).