Court File and Parties

COURT FILE NO.: CV-20-00644545-0000 DATE: 20240725 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Iskatewizaagegan No. 39 Independent First Nation Plaintiff

• and - CITY OF WINNIPEG and HIS MAJESTY THE KING IN RIGHT OF ONTARIO Defendants

Counsel: Julian N. Falconer, Meaghan Daniel, Jeremy Greenberg, and Christianne Labelle for the Plaintiff Thor Hansell and Shea T. Garber for the Defendant the City of Winnipeg Vanessa Glasser, Ram Rammaya, and Ella Leishman for the Defendant His Majesty the King in Right of Ontario

HEARD: In writing

PERELL, J.

Reasons for Decision - Costs

[1] This is a costs decision for what the parties labelled a Hybrid Motion.

[2] In this action, Iskatewizaagegan No. 39 Independent First Nation (the First Nation) sues the City of Winnipeg and His Majesty the King in Right of Ontario (the Province of Ontario) for compensation for “lands or property taken, injuriously affected, or in any way interfered with” as a result of Winnipeg’s construction of an aqueduct and water-takings at Shoal Lake. The First Nation claims damages of $500 million for: (a) ecological injury, (b) cultural damage, (c) spiritual damage, (d) financial damage, and (e) the “Headlands Issue”. The Headlands Issue is an allegation that the First Nation was wrongfully deprived of reserve lands promised to it by the Government of Canada under Treaty No. 3.

[3] In the Hybrid Motion, the First Nation sought leave to deliver an Amended Fresh as Amended Statement of Claim (a) to increase its claim for compensation to $2.0 billion and (b) to make it clear that the Headlands Issue is a part of its claim against Winnipeg and Ontario.

[4] The Hybrid Motion had three branches. The first branch was pursuant to rule 21.01 (1) (a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for a ruling on a conceived issue of law. The second branch was pursuant to rule 26, for leave to amend the Fresh as Amended Statement of Claim to increase the quantum of the claim for compensation and to provide particulars of the Headlands Issue. The third branch was a refusals motion brought because during the examinations for discovery, the Defendants refused to answer questions about the Headlands Issue.

[5] The common denominator of these three branches is that they focus on the Headlands Issue, which from the First Nation’s perspective is a matter that falls within the scope of the existing claim. However, from the perspective of the Defendants, the Headlands Issue is about the First Nation’s alleged entitlement to the Headlands in Shoal Lake and is a new claim about aboriginal rights and aboriginal land claims associated with Treaty No. 3, a treaty between the federal government of Canada and twenty-eight First Nations. The Defendants asserted that the Headlands Issue is (a) new cause of action that is distinct from the First Nation’s existing causes of action; (b) an abuse of process; (c) statute-barred as a new cause of action beyond the two-year limitation period and beyond the fifteen-year ultimate limitation period under Ontario’s Limitations Act, 2002, S.O. 2002, c. 24, Sched. B; and (d) doomed to fail for want of necessary parties, including the federal government of Canada and other signatories of Treaty No. 3.

[6] I decided the Hybrid Motion as follows.

a. The first branch of the Hybrid Motion, which is for the determination of an issue before trial pursuant to rule 21.01, is dismissed.

b. The second branch, which is for leave to deliver an amended pleading pursuant to rule 26.01, is granted on terms that within ten days the First Nation deliver a Second Fresh as Amended Statement of Claim that complies with the technical rules of pleading. In the Second Fresh as Amended Statement of Claim, the First Nation is at liberty, if it is so advised, to join His Majesty the King in Right of Canada (the federal Crown) and/or Shoal Lake #40 First Nation as a party defendant. After the First Nation delivers its Second Fresh as Amended Statement of Claim, Winnipeg and Ontario shall have ten days to either: (a) move to strike the Second Fresh as Amended Statement of Claim on technical grounds for non-compliance with the rules of pleading; or (b) deliver Fresh as Amended Statements of Defence and if it is so advised, to join His Majesty the King in Right of Canada (the federal Crown) and/or Shoal Lake #40 First Nation as a third party.

c. As for the third branch of the Hybrid Motion, the refusals motion, it is dismissed save for four questions in the examination for discovery of Scott Lockhart (Ontario’s representative).

[7] For the Hybrid Motion, the First Nation requests costs of $201,547.50 ($201,208.50 in fees and $339.00 in disbursements) on a substantial indemnity scale, payable within 30 days.

[8] For the Hybrid Motion, Ontario submits that there should be no order as to costs or alternatively that the First Nation receive partial indemnity costs of $20,000, all inclusive.

[9] For the Hybrid Motion, Winnipeg submits that there should be no order as to costs or that costs of the motions be in the cause. In a further alternative, Winnipeg submits that the First Nation receive partial indemnity costs of between $15,000 to $20,000.

[10] In my opinion, the appropriate costs award in all the circumstances of the Hybrid Motion is to award the First Nation partial indemnity costs of $90,000 all inclusive in the cause.

[11] There is no basis for a costs award on a substantial indemnity basis. The Hybrid Motion was necessary to resolve the ambiguity of the Headlands claim. And in light of the First Nation’s desire to increase its claim from $500 million to $2,000 million, it was reasonable for the Defendants to resist the Hybrid Motion. There was nothing in the procedural conduct of any of the parties that would warrant a punitive costs award.

[12] In seeking a substantial indemnity award, the First Nation relied on the principles of reconciliation between Indigenous peoples and the Crown's assertion of sovereignty. However, the principles of reconciliation were not argued on the motion. And the Hybrid Motion was not a motion for the payment of costs in advance or for interim costs or for costs to a public interest litigant. The Hybrid Motion was an interlocutory procedural motion without any determination of the merits and what role, if any, the principles of reconciliation of Indigenous peoples with the Crown's assertion of sovereignty have to do with the merits remains to be determined in the future.

[13] In Anderson v. Alberta, 2022 SCC 6 and British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, the Supreme Court established a framework for assessing claims for advance costs to offset the anticipated litigation expenses of public interest litigants, especially First Nation claimants advancing Aboriginal Law claims. In the immediate case, there is an insufficient evidentiary record to make an extraordinary costs determination based on the principles of reconciliation.

[14] Globally speaking, the Hybrid Motion was mixed success and failure for all the parties. Thus, there was considerable strength in the Defendants’ argument that given the very divided success on the Hybrid Motion that the appropriate order was that each side should bear their own legal costs.

[15] However, in my opinion, notwithstanding the strength of the Defendants’ argument, the better argument is that it would be unfair to make no award of costs having regard to the enormous importance of the motion to both sides and having regard to the First Nation’s substantial success in being granted permission to amend its Statement of Claim.

[16] The litigation warfare between the parties is far from over, but the Hybrid Motion was a major success for the First Nation. In my opinion, the First Nation’s success demands an award to it on a partial indemnity basis in the cause. If the First Nation ultimately succeeds in its action, then it should recover its partial indemnity costs for the Hybrid Motion. If the First Nation ultimately fails in its action, then the Defendants will not recover their costs for the Hybrid Motion, all of which strikes me as the fair and just costs award in all the circumstances.

[17] A partial indemnity award of $134,478.00, however, is excessive and unreasonable.

[18] The First Nation’s counsel team consisted of four lawyers that expended 588 hours for the Hybrid Motion. Ontario engaged three lawyers and Winnipeg engaged two lawyers for the Hybrid Motion. Ontario advised that its counsel expended 127.31 hours for the Hybrid Motion.

[19] It is not surprising that the First Nation might expend more time in prosecuting the Hybrid Motion than the Defendants, especially given that the Hybrid Motion was very important. However, the Hybrid Motion was nevertheless just an interlocutory procedural motion and not a decision on the merits. It is beyond the reasonable expectations of the losing parties who reasonably resisted the Hybrid Motion to be called to pay a partial indemnity of $134,478.00 for a pleadings and refusals motion.

[20] In my opinion, the appropriate partial indemnity award is $90,000, all-inclusive, payable to the First Nation in the cause payable jointly by the Defendants.

[21] Order accordingly.

Perell, J. Released: July 25, 2024