Feds appeal part of residential school agreement

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The Attorney General of Canada has challenged part of a Saskatchewan court's approval of the residential schools compensation agreement.

In the three-page notice of appeal filed on Jan. 15, the federal government challenged a decision reached by Saskatchewan Court of Queen's Bench Justice Dennis Ball regarding payment of legal fees to the Regina-based Merchant Law Group (MLG).

Several legal grounds were raised in the appeal, all attempting to make the point that Justice Ball erred in law when he decided a disagreement between federal Crown lawyers and MLG. The disagreement was over legal fees to be paid to the Regina firm as part of the compensation agreement.

In an affidavit to the Ontario court that was also assessing the compensation agreement, retired Supreme Court of Canada justice Frank Iaccobucci, the federal representative appointed to guide the parties to a settlement, had raised concerns about the fees claimed by MLG.

Iaccobucci and Tony Merchant, MLG's senior partner, concluded a written agreement that was intended to govern the process of substantiating MLG's billings to the retired justice's satisfaction.

But the Crown and MLG came away from that process with different understandings of just when the money would be paid to the Regina firm. Merchant expects a cheque from the Crown for almost $50 million right away, now that the compensation agreement has been approved by the court. The Crown argues it should not pay until it has reviewed all of MLG's billing.

Justice Ball laid out his assessment of the details of the disagreement in his Dec. 15 ruling that approved the compensation agreement.

"MLG submits that the settlement agreement requires Canada to immediately pay legal fees of $40 million (plus GST and PST) and disbursements of $3,606,266.00 (plus GST) to MLG for a total of $49,369,243.00," the judge wrote. "Canada submits that it is not obligated to pay anything until MLG verifies facts relevant to its claim." The Crown clearly believes that MLG has not yet proven it has earned that amount.

"Canada has filed affidavits asserting that MLG failed or refused to provide satisfactory verification. Canada says that by approving the settlement agreement the court will only be approving a process whereby the appropriate fees payable to MLG can be determined," Ball added. "In summary, both parties ask the court to approve the settlement agreement as it relates to MLG, but they are almost $50 million apart in their understanding of what it requires. Obviously, the court cannot approve an agreement for the payment of fees unless it understands how much is to be paid or how that amount is to be determined."

After dealing with this matter for 16 pages of the 23-page decision that concluded the compensation agreement is fair and just, the judge set the minimum amount MLG can receive at $25 million.

"I find that the provisions of the settlement agreement requiring payment of legal fees and disbursements to MLG are clear and enforceable. If the federal representative and MLG cannot agree on an amount, it shall be determined by an action to be brought in the Court of Queen's Bench for Saskatchewan with the amount of legal fees payable to MLG to in no event be more than $40 million or less than $25 million," Ball wrote. "If the parties cannot agree and an action becomes necessary, it will be incumbent on MLG to adduce all relevant evidence to verify its claim in a format that does not breach solicitor/client privilege. If MLG does not do so, it cannot expect to receive payment of more than $25 million."

The Crown's appeal of that decision suggests it is not convinced MLG has earned even $25 million and that Ball's decision will require payment of that amount even if no proof of work is offered. Tony Merchant has said publicly that he believes his firm has earned as much as $80 million.

The matter will be scheduled for a hearing in the near future. But while the lawyers fight over money, implementationof the agreement is on hold.

Assembly of First Nation National Chief Phil Fontaine has a problem with that.

"We are very disappointed to learn that the Attorney General of Canada has appealed part of a Regina court decision to approve the Inian residential school class action lawsuit. We strongly encourage the government of Canada and the Saskatchewan court to sever this legal issue, so that the $1.9 billion settlement process can proceed without further delay in settlement payments for survivors," he said. "We have now heard from all nine courts. All agree the settlement agreement is fair and just. Compensation payments for the approximately 80,000 residential school survivors should likely begin later this summer." The national chief reminded all the parties that time is of the essence for many of the survivors.

"We want to emphasize to the courts and the government the importance of getting this historic settlement completed in a timely matter. Many of the survivors, who are elderly and sick, are dying at a rate of four a day. We all agree we want to see an end to this sad chapter of Canadian history," he said. "The courts' certification also means the Truth Commission will be starting its work next summer. The Truth Commission will ensure that all Canadians will understand the significance of the serious harm done to our people. First Nations are determined to send the message to the world that "never again" will such actions be tolerated in Canada."