Tuesday, August 7, 2012

ATTAWAPISKAT FIRST NATION HER MAJESTY THE QUEEN IN Date: 20120801 Docket: T-2037-11 Citation: 2012 FC 948

Date: 20120801
Docket: T-2037-11
Citation: 2012 FC 948
Ottawa, Ontario, August 1, 2012
PRESENT: The Honourable Mr. Justice Phelan

[1] The Applicant, Attawapiskat First Nation [AFN], seeks judicial review of the Respondent
Minister of Aboriginal Affairs and Northern Development’s [Minister] decision to appoint a Third-
Party Manager [TPM] to AFN due to an alleged default by AFN under its Comprehensive Funding
Page: 2
[2] This judicial review confirms, if such confirmation were needed, that decisions made in the
glare of publicity and amidst politically charged debate do not always lead to a reasonable
resolution of the relevant issue.
[3] The housing situation at Attawapiskat was extensively covered in the media. This case
started with accusations of political motive and retribution by the federal government, in the person
of the Prime Minister and some Cabinet Ministers, against the AFN for the public embarrassment
the housing situation caused. Those allegations were largely withdrawn and to the extent that they
linger, the Court finds that there is no evidence that the Prime Minister or the Cabinet engaged in
such reprehensible conduct. The problem in this case does not lie at the feet of the political masters
but in the hands of the bureaucracy.
[4] While there was a “default” under the Comprehensive Funding Agreement, the remedy
selected – the appointment of a Third Party Manager – was unreasonable. The decision to appoint
did not respond in a reasonable way to the root of the problems at Attawapiskat nor to the remedies
available upon default under the Comprehensive Funding Agreement. The Respondent invoked a
financial management remedy without considering more reasonable, more responsive or less
invasive remedies available.
[5] The Applicant previously brought a Motion for several forms of interlocutory relief
including an injunction against the Minister from appointing a TPM. By Order dated February 3,
2012, this Court dismissed the Applicant’s Motion subject to compliance by the Minister and his
TPM with the terms of the Order.
Page: 3
[6] At the time of the injunction hearing, the most pressing matter was the movement of
22 “trailer” homes [modular homes] over a winter road and their installation. The Court’s Order
refusing the injunction was conditioned by terms that were to make such movement and installation
possible. Absent such conditions in the Order and compliance therewith, some form of injunctive
relief would have been granted.
[7] Of significance to the injunction hearing and to this judicial review is that it was the AFN
who obtained a quote for the modular homes and who had secured the assistance of De Beers
Canada Ltd., the mining company operating a mine near the reserve and who are experienced in the
installation of such housing, as project manager.
[8] On April 5, 2012, and effective April 19, 2012 (five days before the judicial review
application was scheduled to be heard), the Respondent withdrew the TPM and subsequently
brought a Motion to Dismiss on the basis that the judicial review was moot. That Motion was heard
on the same day as the judicial review application, dismissed and the judicial review proceeded.
[9] The parties were advised that more fulsome reasons for dismissal of the Respondent’s
Motion to Dismiss would be contained in the Reasons issued on the judicial review application. For
the reasons that follow, the Court dismissed the Respondent’s Motion and concludes that the
application for judicial review should be allowed.
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[10] Attawapiskat First Nation is one of seven Mushkegowuk Cree communities near James Bay
in northern Ontario. The AFN have 300 housing units, most of which have reached or are near the
end of their useful life with the result that last year, the AFN experienced a serious and
unprecedented housing crisis on the reserve.
[11] Many AFN members were living in overcrowded and unsafe conditions in uninsulated and
unserviced dwellings or in tents where sanitation was a bucket and where mold was rampant. The
Applicant filed numerous letters from medical professionals that address the types of diseases and
other conditions on the Reserve due to the shortage of proper housing. The situation was an
embarrassment to a country as rich, strong and generous as Canada.
[12] In August 2011, the AFN’s Housing Manager expressed concern to the AFN Chief, Chief
Spence, that band members were requesting construction materials to fortify their tents and shacks,
and that no funds or resources were available for that purpose.
[13] On October 28, 2011, after consultation with AFN’s Chief and Council, Grand Chief Stan
Louttit of the Mushkegowuk Council declared a state of emergency as a result of the housing crisis
developing in several Mushkegowuk First Nation communities including Attawapiskat, particularly
in the face of the upcoming winter weather.
[14] Notably, five families living in tents in the Attawapiskat community were identified by the
AFN Council as a priority. It would appear that officials assumed initially that these were the only
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people facing a crisis whereas, to the AFN, they were not the only people in need but they were the
most critical of those in need.
[15] By a letter dated November 4, 2011, the AFN submitted a proposal for emergency funding
from Aboriginal Affairs and Northern Development Canada (AANDC) totaling $499,500 to
renovate condemned houses on the reserve and render them safe and habitable for families that were
living in tents and shacks.
[16] On November 9, 2011, AANDC confirmed that it would advance funds of approximately
$500,000 for that purpose and authorized an emergency draw of $350,000 from the existing
funding. AANDC requested that the AFN identify the names of the five families currently living in
tents who would be the priority families to move into the renovated houses.
[17] On November 12, 2011, the AFN issued its own declaration of emergency with respect to
the housing crisis.
[18] The AFN’s plans and identified needs expanded over the period to the end of 2011 as
further requirements arose. On November 21, 2011, Chief Spence advised AANDC officials that
there were (in addition to those in tents) 17 families living in shacks whose needs had become
urgent and she requested a further $1.5 million. In response, AANDC asked Chief Spence to submit
a further proposal for funds.
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[19] On November 25, 2011, during a conference call to discuss the declarations of emergency,
Chief Spence informed AANDC officials that the Chief and Council lacked the resources and
capacity to address the housing crisis. The evidence is that the Chief and Council meant that they
did not have the operational capacity to handle the crisis, not that they could not manage the
problem or that there was some issue of financial management.
[20] Finally, on November 28, 2011 (after officials had been invited by the Chief since
November 4, 2011), AANDC officials visited Attawapiskat in order to assess the housing crisis.
The following day, the Senior Assistant Deputy Minister [ADM] responsible for Regional
Operations of AANDC emailed the AANDC Associate Regional Director who was still at the AFN
Reserve and first referred to the possible appointment of a TPM to Attawapiskat. This was not made
known to the AFN.
[21] At no time prior to the appointment of the TPM did departmental officials indicate that there
was any problem with Band management. The Band was already under a co-management regime
and no issue of Band management or financial administration was raised.
[22] On November 2, 2011 and then again on November 17, 21, 25, 28 and 29, 2011, the
Minister and his Parliamentary Secretary were questioned in the House by Opposition members
concerning the status of the Government’s response to the Attawapiskat housing crisis which, by
that time, had attracted significant media attention and public criticism.
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[23] This culminated in statements made by the Prime Minister in the House of Commons on
November 30, 2011 to the effect that the government had invested more than $90 million in the
Attawapiskat community and that the current results were unacceptable. The Prime Minister
indicated that the government would take action to provide immediate assistance and to improve the
long-term management of the community.
[24] Despite the comments about management, the Respondent has not produced evidence of
mismanagement or incorrect spending. In fact, the reference by the Prime Minister as to the $90
million could not have related exclusively to the funds made available for housing repair or
[25] Further, despite the declaration of emergency, until the announcement of the appointment of
the TPM, neither the Chief or Council were advised that there was a default under the
Comprehensive Funding Agreement.
[26] It would be inaccurate to suggest that officials were insensitive or uncaring about the
situation at Attawapiskat. The record shows that officials were concerned about the crisis and the
need to address the housing situation. The problem seems to have been a lack of understanding of
the AFN’s actual needs and an intention on the part of officials to be seen to be doing something.
[27] What is striking about this case is the paucity of contemporaneous records by the ADM. In
an environment where note taking is a virtual art form, where the subject matter was caught in
media headlights and Hansard is replete with Question Period behaviour, there is little written
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evidence of the communications flowing from the ADM’s office both up and down the chain of
[28] That same day, November 30, 2011, the ADM notified Chief Spence that the AFN was in
default of its Comprehensive Funding Agreement and that a TPM had been appointed. The letter
I am writing to advise you of Aboriginal Affairs and Northern
Development Canada’s intent to proceed from your current comanagement
agreement to third-party management.
The Department considers the Attawapiskat First Nation to be in
default of its Aboriginal Recipient Funding Agreement per section
9.1(d) and, in particular, that the health, safety or welfare of members
or recipients is at risk of being compromised.
Section 10.2.1 of your 2011/12 funding agreement further states that
in the event the Council is in default under this Agreement, Canada
may ‘appoint, upon providing notice to the Council, a Third Party
Funding Agreement Manager.’
This letter constitutes notice of Canada’s intent to place you under
third-party management. I will notify you once a third-party manager
has been identified to ensure the delivery of AANDC programs and
services and to ensure the health and safety of your community.
[29] Canada, through Aboriginal Affairs and Northern Development Canada, provides transfer
payments to First Nations to enable them to deliver essential services, including housing, to their
members. This funding is provided by way of a Comprehensive Funding Agreement signed by both
Canada and the First Nation. The most recent Agreement with Attawapiskat was signed on
March 14, 2011 and is effective April 1, 2011 to March 31, 2013 [CFA]. It was the CFA in effect at
the time of the appointment of the TPM.
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[30] Section 9.0 of the CFA contains the default provisions. In this instance, the Respondent
relied on section 9.1(d):

9.0 Default

9.1 The Council will be in default of this Agreement in the event:
(a) the Council defaults on any of its obligations set out in this
Agreement or any other agreement through which a Federal
Department provides funding to the Council;
(b) the auditor of the Council gives a denial of opinion or
adverse opinion on the Consolidated Audited Financial Statements of
the Council in the course of conducting an audit under section 4.4
(Reporting) or section 10.3 (Where Financial Statements Not
Provided) of this Agreement or the corresponding clauses in its
(c) in the opinion of the Minister of Indian Affairs and Northern
Development or any other Minister that represents Her Majesty the
Queen in Right of Canada in this Agreement, having regard to
Council’s financial statements and any other financial information
relating to the Council reviewed by the Minister, the financial
position of the Council is such that the delivery of any program,
service or activity for which funding is provided under this
Agreement is at risk;

(d) in the opinion of the Minister of Indian Affairs and
Northern Development or any other Minister that represents
Her Majesty the Queen in Right of Canada in this Agreement,
the health, safety or welfare of Members or Recipients is at risk
of being compromised.

(Emphasis by Court)
[31] In the event of default the Minister has a number of remedies from which to choose as set
out in section 10.0:
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10.0 Remedies on Default
10.1 Parties Will Meet

10.1.1 Without limiting any remedy or other action Canada may
take under this Agreement, in the even the council is in default, the
parties will communicate or meet to review the situation.

10.2 Actions Canada May Take

10.2.1 In the event the Council is in default under this Agreement,
Canada may take one or more of the following actions as may
reasonably be necessary, having regard to the nature and extent of
the default:
(a) require the Council to develop and implement a Management
Action Plan within sixty (60) calendar days, or at such other
time as the parties may agree upon and set out in writing;
(b) require the Council to seek advisory support acceptable to
(c) appoint, upon providing notice to the Council, a Third Party
Funding Agreement Manager;
(d) withhold any funds otherwise payable under this Agreement;
(e) require the Council to take any other reasonable action
necessary to remedy the default;
(f) take such other reasonable action as Canada deems
necessary, including any remedies which may be set out in
any Schedule;
(g) terminate the Agreement.
[32] Section 1.1.1 of the CFA defines “Third Party Funding Agreement Manager” as “a third
party, appointed by Canada, that administers funding otherwise payable to the Council and the
Council’s obligations under this Agreement, in whole or in part, and that may assist the Council to
remedy default under the Agreement.”
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[33] Decisions regarding the imposition of Third-Party Management are normally made by the
Regional Director General because they are familiar with the details of default prevention and
management for a specific First Nation. However, in this case, the ADM’s evidence is that he alone
made the decision given the exigent circumstances and his knowledge of the file.
[34] In the ADM’s subsequent explanation of his rationale for appointment of a TPM, he relied
on the fact that the AFN was already in co-management and therefore the next level of intervention
(according to corporate policy) was third party management. The ADM did not refer to, rely upon
or contemplate the remedies available under Clause 10 of the CFA, including requiring the Council
to seek advisory support acceptable to the government.
[35] The Chief and Council immediately objected to AANDC’s appointment of a TPM by Band
Council Resolution and by letter dated December 2, 2011. The AFN also invited immediate
[36] In response, AANDC asserted that its decision to appoint a TPM was a direct result of
AANDC taking into account the AFN declaration of the state of emergency and the ensuing
AANDC assessment which had determined that urgent health and safety issues demand immediate
[37] The Respondent appointed as TPM a person who had been an advisor to the AFN
previously but who had been fired by the Council. There appears to be no consideration of the
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reaction this particular appointment would have on the AFN – a reaction that ought to have been
[38] The suitability of the particular person is not a relevant issue here. However, it does explain,
in part, the atmosphere of distrust and animosity surrounding the whole TPM process.
[39] More germane to the issues in this case is that the TPM had financial management
experience but none relevant to the handling of this housing crisis. Moreover, the mandate of the
TPM was that of financial control (approval of invoices and similar matters) in a situation where
financial management was not an issue.
[40] In December 2011, the Applicant brought this application for judicial review of the
Minister’s decision to appoint a TPM. In their submissions, they allege that the Minister erred when
he found the AFN to be in default of the CFA and thus appointed a TPM without first finding the
Council to be at fault with respect to compromising the health, safety or welfare of AFN members,
which the Applicant argues the Minister was required to do in accordance with s 9.1(d).
Alternatively, they argue that the Minister erred in choosing to appoint a TPM as a remedy to the
housing crisis.
[41] On April 5, 2012, the Respondent notified the AFN of its intention to withdraw the TPM,
effective April 19, 2012. The Respondent subsequently filed a Motion to Dismiss on the basis that
the judicial review application was moot.
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[42] The leading authority on the issue of mootness is
Borowski v Canada (Attorney General),
[1989] 1 SCR 342 (available on QL) [
The doctrine of mootness is an aspect of a general policy or
practice that a court may decline to decide a case which raises
merely a hypothetical or abstract question. The general principle
applies when the decision of the court will not have the effect of
resolving some controversy which affects or may affect the rights
of the parties. If the decision of the court will have no practical
effect on such rights, the court will decline to decide the case. This
essential ingredient must be present not only when the action or
proceeding is commenced but at the time when the court is called
upon to reach a decision. Accordingly if, subsequent to the
initiation of the action or proceeding, events occur which affect the
relationship of the parties so that no present live controversy exists
which affects the rights of the parties, the case is said to be moot.
The general policy or practice is enforced in moot cases unless the
court exercises its discretion to depart from its policy or practice.
The relevant factors relating to the exercise of the court's discretion
are discussed hereinafter.

The approach in recent cases involves a two-step analysis.
First it is necessary to determine whether the required tangible and
concrete dispute has disappeared and the issues have become
academic. Second, if the response to the first question is
affirmative, it is necessary to decide if the court should exercise its
discretion to hear the case. The cases do not always make it clear
whether the term "moot" applies to cases that do not present a
concrete controversy or whether the term applies only to such of
those cases as the court declines to hear. In the interest of clarity, I
consider that a case is moot if it fails to meet the "live controversy"
test. A court may nonetheless elect to address a moot issue if the
circumstances warrant.
[43] According to
Borowski, above, it is necessary to consider, first, whether the proceeding is
moot and then, if it is moot, whether a decision should be rendered despite the mootness. A
proceeding becomes moot when circumstances have changed so that there is no longer a “live
controversy” between the parties that can be resolved by a decision in that proceeding.
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[44] Relying on the fact that the TPM had been withdrawn, the Respondent argued that there can
be no practical effect to any order that the appointment be set aside and declaratory relief would be
similarly meaningless. The Court disagrees.
[45] While a significant element of the relief previously sought is no longer at issue given the
withdrawal of the TPM, this Court’s determination of the legality of the Minister’s decision to
appoint the TPM will have a “practical effect” on the rights of the parties, for example, with respect
to who should undertake the fees drawn by the TPM from the AFN’s CFA funding for the provision
of management services. And, as the Applicant notes, a TPM was appointed and he did, in fact,
administer the AFN’s funds between December 5, 2011 and April 19, 2012. The legality of his
actions on behalf of the AFN during this period may be affected by this Court’s decision.
[46] Further, the proper interpretation of the CFA, and particularly the default and remedy
provisions which the Applicant has put directly in issue, remains a live controversy given the fact
that the parties to this application continue to be parties to the CFA and will administer their
respective rights and obligations under that agreement.
[47] It is also of note that other funding agreements between the Government and First Nations
contain similar or identical provisions to those at issue here, thus magnifying the importance of
resolving the interpretation issues. As the Applicant put it, “the resolution of these issues will
condition the legal relationships for many First Nations and for Canada, and may well have a
significant impact on the language of future agreements as well as the interpretation of existing
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ones”. However, the Court cautions that its conclusions are limited to this CFA in the context of the
specific facts of the case.
[48] For the foregoing reasons, the proceeding is not moot simply because the TPM has been
withdrawn and the Court dismisses the Respondent’s Motion. Even if this proceeding were
technically moot, for the above reasons, the Court exercises its discretion to determine this judicial
[49] The issues raised in this application are as follows:
1. Is judicial review available?
2. If so, what is the standard of review?
3. Did the Minister err in his interpretation of the CFA?
4. Did the Minister err in appointing a TPM?
Is judicial review available?
[50] The Respondent argues that judicial review is not available in the circumstances of this case
because the dispute is fundamentally contractual in nature, despite the fact that a public authority is
involved. As such, the law of contract is applicable. They further argue that the power of the
Minister to find the AFN in default and to appoint a TPM derives entirely from the CFA itself and
that if the AFN seeks to have determined that Canada’s appointment of a TPM constitutes a breach
of the CFA, it must do so under s 17 of the
Federal Courts Act, which provides for relief against the
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Crown, by way of an action
, rather than by way of a judicial review. They say that given the
exercise of the contractual right to appoint a TPM is not an exercise of delegated statutory authority,
there is no legitimate public law purpose to justify the substantive review of the reasonableness of
the decision. However, for the following reasons, the Respondent takes too narrow a view of the
relationship of the parties, the nature of the CFA and the unique circumstances of the Crown in
relation to natives – the
sui generis nature of Crown-native dealings.
[51] In
Irving Shipbuilding Inc v Canada (Attorney General), 2009 FCA 116, [2010] 2 FCR 488
Irving Shipbuilding], relied upon by the Respondent, the issue was whether a subcontractor, Irving
et al, of an unsuccessful bidder for a government procurement contract may apply for judicial
review to challenge the fairness of the process for awarding the contract when the unsuccessful
bidder decides not to litigate. At the Federal Court, Harrington J. dismissed the application for
judicial review rejecting the argument put forward by Irving et al that the award of the contract to
another bidder was vitiated by procedural unfairness.
[52] In the course of dismissing the appeal, the Federal Court of Appeal agreed with the parties
that the award of a public contract, in this case a contract for the maintenance and servicing of
Canadian Navy submarines, can be the subject of an application for judicial review. However, the
circumstances in which the Court should grant relief requires a consideration of other factors. The
Court explained as follows:

The fact that the power of the Minister, a public official, to
award the contract is statutory, and that this large contract for the
maintenance and servicing of the Canadian Navy's submarines is a
matter of public interest, indicate that it can be the subject of an
application for judicial review under section 18.1, a public law
proceeding to challenge the exercise of public power. However, the
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fact that the Minister's broad statutory power is a delegation of the
contractual capacity of the Crown as a corporation sole, and that its
exercise by the Minister involves considerable discretion and is
governed in large part by the private law of contract, may limit the
circumstances in which the Court should grant relief on an
application for judicial review challenging the legality of the award
of a contract.
[53] On the issue of whether the appellants in that case had a right to procedural fairness arising
from the common law in respect of administrative action, the Court of Appeal explained:

The context of the present dispute is essentially commercial,
despite the fact that the Government is the purchaser. PWGSC has
made the contract pursuant to a statutory power and the goods and
services purchased are related to national defence. In my view, it will
normally be inappropriate to import into a predominantly
commercial relationship, governed by contract, a public law duty
developed in the context of the performance of governmental
functions pursuant to powers derived solely from statute.
[54] In finding against the appellants, the Court further explained “ . . . when the Crown enters
into a contract, its rights and duties, and the available remedies, are generally to be determined by
the law of contract” (at para 60).
[55] More recently, in
Air Canada v Toronto Port Authority, 2011 FCA 347, 426 NR 131[Air
], the Federal Court of Appeal addressed the issue of determining whether a matter is public
or private for the purposes of judicial review. Beginning at paragraph 60, the Court explained as

In determining the public-private issue, all of the
circumstances must be weighed:
Cairns v. Farm Credit Corp.,
[1992] 2 F.C. 115 (T.D.);
Jackson v. Canada (Attorney General)
(1997), 141 F.T.R. 1 (T.D.). There are a number of relevant factors
relevant to the determination whether a matter is coloured with a
public element, flavour or character sufficient to bring it within the
Page: 18
purview of public law. Whether or not any one factor or a
combination of particular factors tips the balance and makes a
matter "public" depends on the facts of the case and the overall
impression registered upon the Court. Some of the relevant factors
disclosed by the cases are as follows:
The character of the matter for which review is sought. Is it a
private, commercial matter, or is it of broader import to
members of the public? See
DRL v. Halifax Port Authority,
; Peace Hills Trust Co. v. Moccasin, 2005 FC 1364 at
paragraph 61, 281 F.T.R. 201 (T.D.) ("[a]dministrative law
principles should not be applied to the resolution of what is,
essentially, a matter of private commercial law...").
The nature of the decision-maker and its responsibilities. Is the
decision-maker public in nature, such as a Crown agent or a
statutorily-recognized administrative body, and charged with
public responsibilities? Is the matter under review closely
related to those responsibilities?

- The extent to which a decision is founded in and shaped by law
as opposed to private discretion.
If the particular decision is
authorized by or emanates directly from a public source of law
such as statute, regulation or order, a court will be more willing
to find that the matter is public:
Mavi, supra; Scheerer v.
(2006), 208 O.A.C. 29, 265 D.L.R. (4th) 749 (Div.
Aeric, Inc. v. Canada Post Corp., [1985] 1 F.C. 127
(T.D.). This is all the more the case if that public source of law
supplies the criteria upon which the decision is made:
v. Waldbillig
, supra at paragraph 19; R. v. Hampshire Farmer's
Markets Ltd.
, [2004] 1 W.L.R. 233 at page 240 (C.A.), cited
with approval in
MacDonald v. Anishinabek Police Service
(2006), 83 O.R. (3d) 132 (Div. Ct.). Matters based on a power
to act that is founded upon something other than legislation,
such as general contract law or business considerations, are
more likely to be viewed as outside of the ambit of judicial
Irving Shipbuilding Inc, supra; Devil's Gap Cottager
(1982) Ltd. v. Rat Portage Band No. 38B
, 2008 FC 812 at
paragraphs 45-46, [2009] 2 F.C.R. 267.

- The body's relationship to other statutory schemes or other
parts of government
. If the body is woven into the network of
government and is exercising a power as part of that network,
its actions are more likely to be seen as a public matter:

Onuschuk v. Canadian Society of Immigration
, 2009 FC 1135
at paragraph 23, 357 F.T.R. 22;
Certified General Accountants
Association of Canada v. Canadian Public Accountability
(2008), 233 O.A.C. 129 (Div. Ct.); R. v. Panel on Takeovers
and Mergers; Ex Parte Datafin plc.
, [1987] Q.B. 815
Page: 19
Volker Stevin N.W.T. ('92) Ltd. v. Northwest Territories
, [1994] N.W.T.R. 97, 22 Admin. L.R. (2d)
251 (C.A.);
R. v. Disciplinary Committee of the Jockey Club,
ex parte Aga Khan
, [1993] 2 All E.R. 853 at page 874 (C.A.);
R. v. Hampshire Farmer's Markets Ltd.
, supra at page 240
(C.A.). Mere mention in a statute, without more, may not be
Ripley v. Pommier (1990), 99 N.S.R. (2d) 338, [1990]
N.S.J. No. 295 (S.C.).

- The extent to which a decision-maker is an agent of
government or is directed, controlled or significantly
influenced by a public entity.
For example, private persons
retained by government to conduct an investigation into
whether a public official misconducted himself may be
regarded as exercising an authority that is public in nature:

Masters v. Ontario
(1993), 16 O.R. (3d) 439, [1993] O.J. No.
3091 (Div. Ct.). A requirement that policies, by-laws or other
matters be approved or reviewed by government may be
Aeric, supra; Canadian Centre for Ethics in Sport v.
, [2007] O.J. No. 2234 (S.C.J.).
- The suitability of public law remedies.
If the nature of the
matter is such that public law remedies would be useful, courts
are more inclined to regard it as public in nature:
; Irving Shipbuilding, supra at paragraphs 51-54.
- The existence of compulsory power.
The existence of
compulsory power over the public at large or over a defined
group, such as a profession, may be an indicator that the
decision is public in nature. This is to be contrasted with
situations where parties consensually submit to jurisdiction.
Chyz v. Appraisal Institute of Canada (1984), 36 Sask. R.
266 (Q.B.);
Volker Stevin, supra; Datafin, supra.
- An "exceptional" category of cases where the conduct has
attained a serious public dimension
. Where a matter has a very
serious, exceptional effect on the rights or interests of a broad
segment of the public, it may be reviewable:
Aga Khan, supra
at pages 867 and 873; see also Paul Craig, "Public Law and
Control Over Private Power" in Michael Taggart, ed.,
Province of Administrative Law
(Oxford: Hart Publishing,
1997) 196. This may include cases where the existence of
fraud, bribery, corruption or a human rights violation
transforms the matter from one of private significance to one of
great public moment:
Irving Shipbuilding, supra at paragraphs
Page: 20
[56] Despite the Respondent’s reliance on the above cases, the context of the present dispute
cannot be said to be “essentially commercial” or to be a private matter in all of the circumstances.
Indeed, taking into consideration what is being acquired by the government through the CFA as
well as the nature of the relationship between the parties, it is clear that the present dispute is far
from private for the purposes of judicial review.
[57] Here, the CFA was an agreement for the provision of funding for essential services, such as
housing, to members of a First Nation living in the isolated and hostile environment of the north.
These members live on reserves created by treaty where such services are the life blood of the
community. This is clearly distinct from a contract for the maintenance and servicing of submarines
as in
Irving Shipbuilding, above, or the buying of pencils or computers for government operations.
[58] Further, the relationship between the Government and a First Nation is unique and cannot be
analogized to the relationship between the Government and a company bidding on a government
contract. Indeed, given the current situation of many First Nations members, it is questionable
whether they could return to their traditional lifestyle for survival if the government did not assist in
supplying some essential services like housing. While treaty rights are not directly at issue, treaty
and Crown relationship plays an underlying role. This situation is one that engages the honour of the
Crown. As such, the dispute is imbued with public law elements.
[59] Further, the AFN relies on funding from the government through the CFA to provide
essential services to its members and as a result, the CFA is essentially an adhesion contract
imposed on the AFN as a condition of receiving funding despite the fact that the AFN consents to
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the CFA. There is no evidence of real negotiation. The power imbalance between government and
this band dependent for its sustenance on the CFA confirms the public nature and adhesion quality
of the CFA.
[60] This Court has, in several cases, issued decisions on judicial review of issues similar to those
in this case. In
Elders Council of Mitchikanibokok Inik v Canada (Minister of Indian Affairs and
Northern Development
, 2009 FC 374, 343 FTR 298, the Court dealt with management and financial
issues. In
Kehewin Cree Nation v Canada, 2011 FC 364 (available on QL), the Court, in judicial
review proceedings, dealt with a band’s failure to provide financial and other reports to government
as part of funding arrangements.
[61] Applying the principles or factors in
Air Canada, above, the Court concludes:
the character of the matter in issue is broader than simply commercial. The matter
impacts the AFN’s ability to operate and manage its affairs as a “people”.

the nature of the decision-maker is as the delegate of the Minister carrying out
responsibilities of a public nature owed to a group of First Nations people.

the decision at issue is founded by a provision that speaks directly to the “health,
safety or welfare” of these people. It is a provision of public welfare not commercial

the Minister’s relationship to the AFN is intertwined with constitutional and
statutory schemes. It is a relationship of one government to another.

there is no issue that the decision-maker is an agent of the federal government
directed by statute, regulation and governmental policy.
Page: 22

public law remedies such as declaration, injunction and certiorari would adequately
address the challenge to the decision to appoint a TPM.

the AFN are in a compulsory relationship with the Crown by virtue of the
constitution and legislation. This is not a consensual submission to jurisdiction.

there is no doubt that given the public, media and political profile of the housing
crisis, the issues in this matter had a serious public dimension.
[62] Ultimately, the Court concludes that judicial review is available in the circumstances of this
Standard of Review
[63] On the first issue regarding the Minister’s interpretation of the CFA, and specifically
whether the risk of compromise to the health, safety or welfare of AFN members must be caused by
the Council before the Council can be found in default of the CFA (and the Minister can seek a
remedy of appointing a TPM), the applicable standard of review is correctness.
[64] The Minister, in interpreting the CFA, and his powers under the CFA, does not enjoy the
deference that an adjudicative tribunal interpreting its statute enjoys for the reasons given by the
Federal Court of Appeal in
Canada (Fisheries and Oceans) v David Suzuki Foundation, 2012 FCA
40, (
sub nom Georgia Strait Alliance v Canada (Minister of Fisheries and Oceans)), 427 NR 110
David Suzuki].
Page: 23
[65] In
David Suzuki, above, the Minister of Fisheries and Oceans appealed a judgment of the
Federal Court that declared that ministerial discretion does not “legally protect” critical habit under
section 58 of the
Species at Risk Act [SARA] and that it was unlawful for the Minister to have cited
discretionary provisions of the
Fisheries Act in a protection statement. In his first ground of appeal
concerning the standard of review, the Minister argued that Parliament made him responsible for the
administration of the regulatory schemes of the SARA and of the
Fisheries Act; hence, his
interpretation of their provisions is entitled to deference. In rejecting this position, the Federal Court
of Appeal referred to recent Supreme Court of Canada jurisprudence beginning with
Dunsmuir v
New Brunswick
, 2008 SCC 9, [2008] 1 SCR 190 [Dunsmuir], that established that, unless the
situation is exceptional, the interpretation by an adjudicative tribunal of its enabling statute or of
statutes closely related to its functions should be presumed to be a question of statutory
interpretation subject to deference on judicial review. The Court then explained as follows:

… By empowering an administrative tribunal to adjudicate a
matter between parties, Parliament is presumed to have restricted
judicial review of that tribunal's interpretation of its enabling
statute and of statutes closely connected to its adjudicative
functions. That presumption may however be rebutted if it can be
found that Parliament's intent is inconsistent with the presumption.

The Minister is inviting this Court to expand the abovedescribed
analytical framework and presumption to all
administrative decision makers who are responsible for the
administration of a federal statute. I do not believe that
and the decisions of the Supreme Court of Canada which followed

stand for this proposition.
What the Minister is basically arguing is that the
interpretation of the SARA and of the
Fisheries Act favoured by
his Department and by the government's central agencies, such as
the Department of Justice, should prevail. The Minister thus seeks
to establish a new constitutional paradigm under which the
Executive's interpretation of Parliament's laws would prevail
insofar as such interpretation is not unreasonable. This harks back
to the time before the
Bill of Rights of 1689 where the Crown
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reserved the right to interpret and apply Parliament's laws to suit its
own policy objectives. It would take a very explicit grant of
authority from Parliament in order for this Court to reach such a
far-reaching conclusion.

The issues in this appeal concern the interpretation of a
statute by a minister who is not acting as an adjudicator and who
thus has no implicit power to decide questions of law. Of course,
the Minister must take a view on what the statute means in order to
act. But this is not the same as having a power delegated by
Parliament to decide questions of law. The presumption of
deference resulting from
Dunsmuir, which was reiterated in
Alberta Teachers' Association
at paras. 34 and 41, does not extend
to these circumstances. The standard of review analysis set out at
paragraphs 63 and 64 of
Dunsmuir must thus be carried out in the
circumstances of this case in order to ascertain Parliament's intent.
[66] After conducting a standard of review analysis, the Court of Appeal ultimately determined
that the issues of statutory interpretation raised by the appeal should be reviewed on a standard of
[67] In this case, it is similarly the Minister’s interpretation, albeit of an agreement and not a
statute, that is at issue, not that of an adjudicative tribunal. As noted in
David Suzuki, above, while
the Minister must “take a view” on what particular provisions of the CFA mean in order to act, this
is not the same as having a power delegated by Parliament to decide questions of law. In light of the
fact that the question at issue is a question of law, that the Minister acts in an administrative
capacity, and not as an adjudicator, and that the Minister does not have expertise in the
interpretation of contracts, the standard of correctness is applicable.
[68] On the second issue - of the choice of remedy, the parties agree and I would concur that the
applicable standard of review is reasonableness (see, for example,
Tobique Indian Band v Canada,
Page: 25
2010 FC 67, 361 FTR 202;
Ermineskin Tribe v Canada (Indian Affairs and Northern Affairs), 2008
FC 741, 334 FTR 126).
Did the Minister err in his interpretation of the CFA?
[69] The Applicant alleges that the correct interpretation of s 9.1(d) of the CFA requires that the
risk of compromise to the health, safety or welfare of AFN members be caused by some action, or
failure to act, attributable to the Council before the Council can be found to be in default and the
Minister can invoke the remedy of appointing a TPM. They say that the Minister erred as he did not
turn his mind to the causes of the housing crisis and the specific question of whether the Council
was at fault. The Court disagrees.
[70] Section 9.1(d) reads as follows:
The Council will be in default of this Agreement in the event:
. . .
(d) in the opinion of the Minister of Indian Affairs and Northern
Development or any other Minister that represents Her Majesty the
Queen in Right of Canada in this Agreement, the health, safety or
welfare of Members or Recipients is at risk of being compromised.
[71] A plain reading of s 9.1(d) of the CFA does not support the Applicant’s argument. Rather,
the provision is clear that once the Minister is reasonably of the opinion that the health, safety or
welfare of members of the AFN is at risk of being compromised, the Council can be found to be in
default of the CFA. The Court agrees with the Respondent that s 9.1(d) functions as a deeming
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[72] The Applicant equates “default” with “fault” where the two words are not synonymous. This
is particularly the case where the events of “default” are of a type where fault may not necessarily
be attributable to a party. One can easily contemplate a threat to health or safety (for example) that
arises from entirely external forces but which require remedial action.
[73] The Applicant expresses concern that this community and many other native communities
constantly live in a situation where health, safety and welfare are at risk of being compromised. This
may well be true and is a sad reflection of that life but the ability of the Minister to “swoop in” and
take control of native governments under CFAs is limited by the requirement of “reasonableness”.
[74] However, even if the Minister could reasonably conclude that the health, safety or welfare of
AFN members were at risk of being compromised, the real issue at stake is whether his choice of
remedy was reasonable.
Did the Minister err in appointing a TPM?
[75] The Respondent argues that the appointment of a TPM as a remedy to the housing crisis was
reasonable. They say that due to the AFN’s demonstrated and admitted inability to deal with the
housing crisis, the TPM was appointed in good faith and temporarily to support the goal of
addressing the urgent health and safety needs of the families living in tents and sheds. They allege
that the reasonableness of the decision is evidenced by its consistency with AANDC policies on
default management.
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[76] The Courts must not interfere with the choice of remedy invoked by the Minister where that
choice is reasonable in falling within a reasonable set of outcomes given the facts. The Minister is
entitled to a degree of deference in the choice of remedies.
[77] The reasonableness of the choice of remedies is conditioned by a reasonable and accurate
appreciation of the facts and a consideration of the reasonable alternatives available.
[78] At the core, the difficulty for the Respondent is that the ADM misunderstood the nature of
the problem, choosing a financial tool in the form of a TPM to address what was really an
operational problem. While the AFN were having trouble addressing the housing crisis, what they
lacked was not the ability to manage their finances, in which case a TPM may have been an
appropriate and reasonable remedy, but the material means to do so.
[79] Indeed, when AANDC officials visited the AFN reserve on November 28, 2011, Chief
Spence explained that the Band had not invoked its Emergency Plan because it lacked the necessary
equipment, for example, cots, blankets and other supplies and they requested assistance to work on
their plan and obtain the necessary equipment.
[80] The AFN had also been able to identify nine homes which could be renovated, with five
earmarked for those families living in tent frames. At the time that AANDC officials visited the
reserve, the AFN were awaiting final quotes and planned to be able to start working on the houses
before Christmas with move-in by the middle of January. The AFN was also in the process of
developing their second funding proposal for the remaining homes.
Page: 28
[81] Throughout this process and the period leading up to the appointment of the TPM, AANDC
did not express any concern with the AFN’s financial management. Indeed, there was little in the
way of any contemporaneous notes in the record showing how the ADM arrived at his decision to
appoint a TPM at all. However, rather than provide material assistance to help the AFN remedy any
alleged default, the ADM instead opted to appoint a TPM, whose expertise is financial in nature.
[82] The Court has already referred to the ADM’s concentration on the level of intervention
rising from co-management to TPM rather than focusing on the range of remedies available. The
concentration on internal policies detracted from the attention to be paid to the remedies under the
[83] One of the factors relied upon by the ADM in appointing a TPM was the supposed “failure
of the First Nation to accurately identify how many and which members were in need of assistance,
as demonstrated by the late identification of 17 families in need of assistance” (paragraph 54 of
ADM’s Affidavit).
[84] The ADM failed to appreciate that there was no failure in this respect but rather, that Chief
and Council had simply assigned as a “priority” for attention those five families living in tents.
What the ADM took to be a failure was not a failure at all but merely a reasonable assignment of
action priority.
Page: 29
[85] There was no attempt to clarify what the ADM saw as a dichotomy between the five
families living in tents and 17 families in sheds despite the Mushkegowuk First Nation’s statement
of emergency which referred to both situations.
[86] The ADM had been advised by his officials that the problems faced by the AFN in
addressing the housing crisis were not financial management in nature but due to lack of resources
and equipment. (Applicant’s Record, Vol 4, p 92-93)
[87] Despite choosing what was essentially a financial management remedy in the form of a
TPM and the mandate given, the ADM admitted that at the time of the crisis, financial management
was not the problem. In fact, the AFN was making progress on the implementation of a 2011
remedial management plan.
[88] The evidence shows that the ADM never looked at any remedy other than the appointment
of a TPM despite the indications of problems with resources and equipment.
[89] Ultimately, while the ADM concluded that the appointment of a TPM was a reasonable and
necessary remedy in light of the AFN’s lack of capacity to address the housing crisis, the remedy he
chose failed to deal with the problem at hand, which was not financial in nature. Although courts
must show deference to the Minister’s choice of remedy and specifically, his decision to appoint a
TPM, where the remedy chosen does not respond to the problem, it is not reasonable.
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[90] Therefore, the Court must conclude that the Respondent’s decision to appoint a TPM was
unreasonable in all the circumstances of this case.
[91] The Applicant is entitled to a declaration to that effect. There is no appointment to be
quashed nor actions to be enjoined. The Applicant is entitled to costs on the usual scale.
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the appointment of the Third Party
Manager on November 30, 2011 was contrary to law. The judicial review is granted with costs.
“Michael L. Phelan”


Toronto, Ontario
April 24 and 25, 2012
Phelan J.
August 1, 2012

Ms. Katherine Hensel
Ms. Maria Golarz
Mr. Brendan Van Niejenhuis
Mr. Benjamin Kates
Mr. Gary Penner
Mr. Michael Beggs
Page: 2


Barristers & Solicitors
Toronto, Ontario
Toronto, Ontario
Deputy Attorney General of Canada
Toronto, Ontario