Thunderchild First Nation v. Canada

by reconciliationproject

I do hope to have a series on Tsilhqot’in and on Keewatin – two monster cases from last year. In addition, the extremely well-argued Tlicho case, regarding the creation of a ‘superboard’ in the NWT, is looking to be a humdinger.

But before that, here’s a ridiculous case. The case is Thunderchild First Nation v. Canada ( There really isn’t much to write about Thunderchild, which is one reason I’ll use this case to ease back into this blog. At the outset, this case represents one of the gutsiest moves I’ve ever seen by a Chief and Council.

In essence, this case holds that First Nations can either agree to terms imposed by the federal government in funding agreements or the government will simply take over their operations and presumably impose those very same conditions. It’s an extremely bizarre decision and it suggests that Courts are increasingly hostile to First Nations control of First Nations communities.

At issue in this case is a decision by Aboriginal Affairs and Northern Development to place a First Nation into Third Party Management.

Thunderchild First Nation, as many other First Nations, was upset about the terms and conditions of funding agreements being offered by AANDC. At paragraph 8, the court cited some of these concerns: “(i) the absence of consultation; (ii) the fact that the agreement was affording wider discretion to the Minister; (iii) insufficient funding; and (iv) the requirement that the Council prepare a consolidated audit.”

You get the sense that the terms and conditions for these agreements aren’t really up for any meaningful negotiation. After all, Thunderchild FN did suggest an interim funding agreement, while negotiations proceeded on its concerns, a proposal which was rejected by AANDC.

It’s also true that the excessive amount of government funding, and the agreements which transfer that funding, are the primary means of government control of the activities of First Nations governments (as opposed to, say, legislation and regulation). This means that successive governments can champion a veneer of self-government for First Nations, while at the same time exerting excessive control over community operations through contract.

This is one reason why the language in the Attawapiskat case regarding the Honour of the Crown and funding agreements is so critical.

So, Chief and Council at Thunderchild First Nation said, ‘enough is enough’ and refused to sign their funding agreement. You would think that First Nations would be free to decline funding from the federal government. You would also think that the government, particularly one dominated by a political party which appears to oppose ‘big government socialism’ would be happy to see First Nations off of government funding. You’d be dead wrong.

In the Attawapiskat case, the issue was whether a Third Party management clause within the funding agreement itself could be invoked. But here, there is no funding agreement. What was the basis for the federal government to effectively seize control of a First Nation’s government’s operations?

That they didn’t sign a funding agreement with the federal government.

The basis for this finding is something known (to some, I guess) as Directive 210 – Third Party Agreement Management Directive. I work in this area, and even I had to go look this one up. To be honest, I thought this would be a case of a court selectively cherry-picking language out of a policy document. But I’m not sure that’s the case.

Section 3.1 contains the objective of the Policy:
3.1 Objective
To provide for the timely and effective remedy of high risk Defaults, where the Recipient is assessed by the Department as being unwilling and/or unable to rectify its default situation and only when deemed by the Department to be necessary, by engaging a Third Party Funding Agreement Manager to administer the terms and conditions of the funding agreement signed by the Department – for a period of time during which the Recipient works to remedy the underlying causes of the Defaults and reassume administration of funding.

Reading this, one would assume that refusing to sign an agreement would fall outside the scope of the policy – after all, to paraphrase JOSHUA, the famed computer from the movie Wargames, the best way to avoid default is not to sign the Agreement. But the Court goes on, in paragraph 4:
[4] Directive 210 also includes the following passage at section 4.0 (entitled: “Context (Why this directive matters?)”):
The Directive sets out Third Party Funding Agreement Management as an administrative response appropriate in the event of high risk Defaults involving a First Nation, Tribal Council and Other Aboriginal Recipient providing essential services; or the funding agreement that would normally exist with these Recipients is not in place.
[Emphasis added]

This leads the court to conclude (at para 5) that “AANDC’s internal policy contemplates a TPFAM when no funding agreement is in place, even in the absence of default.” That’s a fairly reasonable conclusion to be drawn from a fairly bizarre policy statement.

Think about it. If a FIrst Nation ends up in Third Party Management under this policy, the only way out is “to remedy the underlying causes of the default”. But if the First Nation didn’t sign a funding agreement, and hence isn’t in default, then they are incapable of doing so! If you think that is a rigid and technical way of reading the policy directive, then consider the government presumably asked the Court to place Thunderchild First Nation in Third Party Management on the strength of those 15 words in section 4 of the Directive.

And the government won.

This should be an incredibly difficult decision to swallow for First Nations governments. For some, their choice is clear – either agree to funding agreements with such harsh conditions that they seriously risk default (and third party management); or, request negotiation of terms, only to be rejected by AANDC and move immediately into Third Party Management.

This case ultimately demonstrates the extreme power imbalance between AANDC and First Nations, particularly where funding is concerned. While most of the decision focused on administrative law issues, the court gave very short shrift to the Honour of the Crown. To be fair, it appears possible that Thunderchild First Nation may only have raised Honour of the Crown in terms of duty to consult and accommodate. I would think that the Honour of the Crown might require a distinct duty where funding arrangements for critical programs and services are needed.

Even if I’m wrong though, the single paragraph the Court devoted to the duty to consult was perfunctory. It bizarrely focused on the Wawatie case ( – a case about whether or not the duty to consult applies in the context of leadership selection. In my view, the court conflated ‘self-government’ in terms of leadership selection and administration of programs and services.

Not only that, the court ignored the more recent Attawapiskat case, which held exactly the opposite – namely that the Honour of the Crown does apply in the context of funding agreements. While, again, there is no funding agreement here – the reason there is no funding agreement is because AANDC refused to enter an interim agreement to provide essential programs and services, instead relying on its own internal policies to seize control of the First Nation’s administration.

That doesn’t seem like ‘good faith’ negotiation – and it doesn’t seem like honourable conduct. It looks to me like a simple case of extortion.

And its the law.