Earlier this year Canada took five First Nations (Sawridge, Athabasca Chipewyan, Onion Lake Cree, Thunderchild and the Ochapowace) to court for not disclosing their financial information, as required under the First Nations Financial Transparency Act (“FNFTA”). The recent Federal Court decision of Canada (Attorney General) v. Cold Lake First Nations has put a hold on Canada’s efforts to force the Nations to disclose financial information under the FNFTA. The Federal Court granted an order staying Canada’s application pending the outcome of legal challenges to Canada and the FNFTA. The Court also granted cost awards to Sawridge and Onion Lake.
In 2013, Canada enacted the First Nations Financial Transparency Act, an Act which drew widespread criticism from First Nations across Canada as being paternalistic, intrusive and overly broad in its reporting and disclosure requirements. While the goals of transparency and accountability gain support from most, if not all First Nations, the FNFTA disclosure requirements and penalties for non-disclosure are onerous and severe. Under the FNFTA, First Nations must disclose financial information that pertains to both federal funding and own source revenue, as well as the salaries and expenses of their chiefs and councils. This includes commercially sensitive information pertaining to private Band owned businesses, a requirement not shared by non-Aboriginal businesses. The financial information must be publically posted on a website within 120 days after the end of each financial year and must remain there for at least 10 years. Failure to do so runs the risk of having funding withheld by the Minister, which can have severe consequences for First Nations who may already be financially strained.
Challenge to the FNFTA
This case arises out of disagreement over the controversial First Nations Financial Transparency Act. Canada, in exercising its (discretionary) authority under the legislation made the decision, without consulting with the Nations, to withhold “non-essential” funding to Sawridge and Onion Lake as a consequence of their non-compliance under the FNFTA. This decision was made despite the fact that there are other less severe enforcement measures that can be taken under the FNFTA (the Minister may require a First Nation to develop a plan to remedy the breach). In an affidavit provided by Chief Fox from Onion Lake, the consequences resulted in more than one million dollars being withheld from band administration and housing services provided on reserve. Shortly after the Minister decided to withhold funds, Canada brought an application against the Nations, in an attempt to force them to disclose their financial information.
The Nations, who made the decision not to comply with the disclosure provisions under the FNFTA, launched their own legal challenges against Canada and the FNFTA on the grounds that the Act violates their constitutionally protected Aboriginal and treaty rights. In response to Canada’s application, the Nations brought forth two motions asking the Court to either grant injunctive relief by exempting the Nations from the FNFTA’s disclosure requirements or alternatively, to grant a stay which would put a hold on Canada’s application pending the outcome of the Nations’ respective legal challenges against Canada and the FNFTA.
The court ultimately granted the stay because it found that a stay would be more appropriate given that there are serious issues being raised by the Nations concerning their constitutional rights, which could be dealt with more adequately by way of action (full discovery and trial) versus being dealt with summarily by way of application. Moreover, the court found that although the Minister had the legal authority to take the actions it did under the FNFTA, that legal right has yet to be judicially determined and the greater public interest favoured the Nations and their right to move forward with their legal action without being encumbered by Canada’s competing application.
An additional motion was put forth by Onion Lake seeking a mandatory injunction that would require the Minister to reinstate the benefits previously withheld while preventing the Minister from taking similar action going forward. The Court dismissed Onion Lake’s motion because it found that there wasn’t enough evidence to show they would suffer irreparable harm. Although general evidence of harm was led, more specificity was required to show how the community members and its services were harmed. Also, specific examples of economic prejudice as a result of disclosing commercially sensitive information to competitors were needed.
The effect of this decision is that the Nations will not be forced to disclose their financial information, as stipulated under the First Nations Financial Transparency Act, until their issues have been judicially determined or otherwise resolved. Given that one of the promises made by the Liberal party prior to being elected was to scrap the FNFTA in favour of legislation based on consultation with First Nations, it may be that the issues at hand, and other similar cases, may be resolved out of court.
In the mean time, another implication of this case is that other First Nations who have had funding withheld for non-disclosure may be successful in asking the court for injunctive relief by leading a stronger evidentiary record of harm.
Link to a Huffington Post story about Liberal party promises
Link to the decision: Canada (Attorney General) v. Cold Lake First Nations, 2015 FC 1197 (CanLII)
Link to the First Nations Financial Transparency Act