Canadian court orders government to pay legal fees in First Nations Drinking Water Class Action

Tataskweyak Cree Nation v Canada (Attorney General), 2021 FC 1442 (CanLII)

Summary

The proceeding involved a court determination about whether fees payable to the Applicants' counsel were "fair and reasonable" in accordance with established case law, following negotiation of a settlement agreement with the state of Canada ("the Respondent").

Facts

In 2019, members of the Neskantaga First Nation, Tataskweyak Cree Nation, and Curve Lake First Nation (the Class) commenced class action proceedings against the Attorney General of Canada.  The Class argued that the Respondent had failed to ensure that First Nations reserves across Canada had access to clean drinking water.  McCarthy Tétrault LLP and Olthuis Kleer Townshend LLP ("Class Counsel") represented the Class in these proceedings, and successfully negotiated the First Nations Drinking Water Settlement Agreement ("the Agreement"), which the Federal Court and Court of Queen's Bench of Manitoba approved on 22 December 2021. The Agreement provided for $8 billion in compensation for members of the Class.

Issue

Article 18, sections 18.01 and 18.02 of the Agreement required the Respondent to pay Class Counsel:

  • $53 million dollars, plus applicable taxes, in respect of legal fees and disbursements; and

  • $5 million, plus applicable taxes, in trust for fees and disbursements for services to be rendered by Class Council and the Joint Committee in accordance with the Agreement (including its implementation and administration).

Rule 334.4 of the Federal Courts Rules (SOR/98-106) and subsection 38(2) of The Class Proceedings Act require all payments to counsel arising from a class action to be approved by the Court.  When doing so, the Court must determine whether legal fees payable to counsel are “fair and reasonable” in all of the circumstances.

In this case, Justice Favel was required to assess whether the sections concerning payments to Class Counsel contained in the Agreement, were "fair and reasonable" in the circumstances.

Judgment

The Court relied on McLean v Canada, 2019 FC 1077 ("McLean"), where Justice Phelan outlined the following, non-exhaustive list of factors relevant to determining what is "fair and reasonable":

1.   results achieved;

2.   risk;

3.   time expended;

4.   complexity;

5.   importance of the litigation to the plaintiffs;

6.   the degree of responsibility assumed by counsel;

7.   the quality and skill of counsel;

8.   the ability of class members to pay;

9.   expectations of the class; and

10. fees in similar cases.

Justice Phelan emphasised in McLean that these factors "weigh differently in different cases and that risk and result remain the critical factors".

1. Results achieved

Justice Favel described the Agreement as a "significant and historic class action settlement", the key features of which included:

  • a $1.438 billion Trust Fund to compensate the Class;

  • a $50 million Specified Injuries Compensation Fund for injuries suffered by the Class;

  • a $400 million First Nations Economic and Cultural Restoration Fund;

  • a commitment of at least $6 billion from Canada to ensure First Nations receive safe drinking water (the "Commitment"); and

  • an alternative dispute resolution process to resolve disputes related to the Commitment, informed by Indigenous legal traditions including gift giving, Elder participation, and traditional teaching.

  • The Court also received affidavits from all of the represented plaintiffs which expressed relief that the issues with water quality were finally being addressed.

  • 2. Risk undertaken

  • Regarding the risks to which the Class was exposed as a consequence of the claim, the Court acknowledged the uncertainty of success, owing to the "novel" nature of this case, and

  • the lack of jurisprudence on the scope and extent of Canada's responsibility for the provision of water on reserves … [and] the type of prospective relief sought in the Actions.

  • As a result, the Court found that the success of the class action was far from certain when considering the risks of:

  • collective claims with bands of plaintiffs, and/or First Nation classes;

  • the uncertainty of the Class size at the commencement of the class action, and certification of claims due to the number of issues faced by the Class;

  • the difficulty in accessing witnesses and records due to the time period of the action;

  • the difficulty in obtaining a wide range of expert reports;

  • the complex nature of constitutional, Aboriginal, and Indigenous law;

  • the defences available to Canada;

  • the prospect of not succeeding on the merits due to the complexities; and

  • uncertainty arising from the political context, given the prospect of a federal election occurring during the litigation, and negotiation.


3. Time expended

The Court briefly noted that Class Counsel had provided summaries of the hours which each law firm had expended involved in the class action. As of 22 November 2021, Class Counsel, Erickson LLP, and First Peoples Law's billable hours were valued at CAD $6,454,951.50. Additionally, the value of Class Counsel's disbursements at the same date was CAD $208,159.63.

4. Complexity of the issue

The Court briefly noted that the Agreement itself demonstrated the complexity of settling past compensation claims, and future commitments around improving water quality.  The Agreement recognises the need for legislative change which compels Parliament to institute proper water quality standards.  It also requires Canada to undertake certain action after the conclusion of the litigation that otherwise may have been outside the scope of an award.

5. Importance of the litigation to the plaintiffs

The affidavits of the Chiefs and members of the First Nations communities clearly articulated how important the class action was to them, their families, their communities, and future generations.  In particular, the Court acknowledged that the affidavit of Chief Emily Whetung explained that her children would not be forced to leave their community because of the Agreement.  A member of Class Counsel further explained the effect that contaminated water has had on the spiritual practices of many First Nations who hold water in high regard.

6. The degree of responsibility assumed by counsel

The Court recognised that the approach taken by Class Counsel to assemble a large legal team aided by First Peoples Law LLP resulted in a very positive outcome for the Class.

7. The quality and skill of counsel

The Court noted that Class Counsel engaged five Indigenous lawyers as part of the team, who were heavily involved in the claim.  The Court considered this effort to be reconciliatory.  Class Counsel also provided evidence of the extensive contributions that Indigenous experts made to the legal work.  The Court concluded that their input had helped shape the quality, and skill, of Class Counsel.

8. The ability of the class to pay

Canada agreed to pay Class Counsel’s fees under the Agreement. If this had not occurred, Class Counsel's fees would have been calculated under their retainers with the Class, causing the fees to be much higher. The Court noted that Canada's commitment in this regard lowered the overall amount of fees, and shifted the burden of payment from the Class. As a result, there were no concerns that the Class would not be in a position to pay Counsel's Fees.

9. The expectation of the class

The consensus present in the affidavits before the Court was that the Class Counsel had achieved extraordinary results.  As an example, the Court pointed to the affidavit of Chief Doreen Spence, who endorsed the requested fees set out in the Agreement.

10. Fees in similar cases

The Court accepted that the value of Class Counsel's fees was significant.  However, the Court also acknowledged that the fees must be considered in the proper context.

The Court cited the fees from McLean as an appropriate comparison.  In that case, the fees totalled $55 million, plus an additional $7 million for future work.  The Court noted that, whilst the legal work in McLean took place over a longer period of time, the Class Counsel's legal fees in this case remained reasonable in the circumstances.  This was because of the larger size of the team involved, and the fact that they were simultaneously pursuing litigation and negotiation which sped up finalisation of the Agreement.

Justice Favel ultimately concluded that the Agreement terms remunerating Class Council were fair and reasonable in the circumstances, having regard to the factors outlined in McLean.

Commentary

The outcome in this case confirms that there are many considerations that must be assessed by a court when deciding whether counsel fees are "fair and reasonable", not just the monetary value of the lawyers' work.  In particular, His Honour gave weight to the involvement of First Nations People when assessing counsel's "quality and skill", as well as the effect of the negotiated outcome on the Class' ability to engage in traditional cultural practices.

The full case can be read here.

MichelleBennett