SCC Restores Adjudicator's Award in Residential School Settlement

In a recent decision, the Supreme Court of Canada (SCC) held that courts had the jurisdiction to supervise residential school settlement agreements on an ongoing basis. 

In the case of J.W. v. Canada (Attorney General), 2019 SCC 20, the majority of the SCC in two separate concurring reasons, and with two judges dissenting, allowed the claimant’s appeal and reinstated an adjudicator’s award that granted him compensation. 

When the claimant was a young boy at a residential school, a nun touched his genitals over his clothing.  He was standing in line waiting for a shower.  He was wearing what he described as a “little apron”.

In 2014, J.W. brought a claim for compensation in accordance with the Independent Assessment Process (IAP), the adjudicative component of the Indian Residential Schools Settlement Agreement (2006) (“Agreement”).  The Agreement represents the negotiated settlement of thousands of individual and class actions lawsuits relating to the operation of residential schools.  Nine provincial and territorial superior courts approved the Agreement.  The Agreement includes a procedure for settling individual claims through the IAP.  The IAP describes which harms are compensable.  The Agreement also includes a system of internal reviews but contains no right of appeal to the Courts.  However, supervising judges from each province oversee the administration of the Agreement. 

J.W. claimed compensation in accordance with the IAP alleging that the incident with the nun constituted compensable sexual abuse within the meaning of the IAP.  J.W.’s claim was rejected by the initial adjudicator because, despite the fact that she believed his account of what happened, she was not satisfied that the nun had acted with a sexual purpose, which she concluded was an essential element in order to demonstrate that the incident was compensable.  J.W. was entitled to two levels of internal review under the terms of the Agreement.  Both of those were unsuccessful.  He then brought a Request for Directions (RFD) to a supervising judge pursuant to the Agreement.  The supervising judge found errors in the adjudicator's interpretation of the IAP and remitted J.W.’s claim for re-adjudication.  A reconsideration adjudicator allowed J.W.’s claim this time and awarded him compensation however, before that decision was implemented, Canada appealed the supervising judge’s decision.  The Manitoba Court of Appeal found that there was no basis upon which the supervising judge could intervene and overturned the decision.  However, on appeal to the SCC, the majority of the Court, by a 5 to 2 margin, ruled that J.W.’s appeal should be allowed and that the reconsideration adjudicator’s award of compensation should be reinstated. 

Justice Abella wrote the reasons for 3 of the 5 majority judges.  She held that J.W.’s claim was precisely the type of claim that was contemplated by the parties to the Agreement.  Failure to correct the initial adjudicator’s errors would unacceptably undermine the whole purpose of the Agreement.  Courts may intervene in relation to IAP adjudications when exceptional circumstances are present.  The parties went to significant lengths to make the Agreement a complete code by including levels of internal review and choosing not to include any provisions granting court access.  However, the necessity of ongoing judicial supervision was recognized when the courts approved the Agreement.  As a result, there is a “foundational link” between judicial supervision and the Agreement.  Given the goals of the Agreement, significant and ongoing judicial supervision is necessary.  Without it, the Agreement would not have been recognized.

In J.W.’s case, the initial adjudicator’s decision was an unauthorized modification of the IAP.  She substituted the wording of the IAP with her own and added the requirement that the nun must have had a sexual purpose which was unsupported by the IAP’s language.  These additional requirements were not agreed to by the parties.  That amounted to a failure to implement the terms of the IAP which warranted judicial intervention.

Justice Abella’s reasons were supported and concurred in by Chief Justice Wagner and Justice Karakatsanis.

Separate reasons were written by Justice Cote with Justice Moldaver concurring.  Justice Cote held that while the parties do not have an option of seeking judicial review of IAP decisions, they can file RFDs with the supervising courts to resolve issues relating to the implementation and administration of the Agreement after fully exhausting the internal review mechanisms in the Agreement.  The Agreement contemplates recourse to the supervising courts in certain specific circumstances.  This creates an alternative avenue for dealing with claims that would otherwise be dealt with by IAP adjudicators.  However, it does not permit the courts to intervene in IAP decisions.  

Parties may seek judicial recourse only in cases where the IAP adjudicator failed to apply the terms of the Agreement.   The test for judicial recourse is whether there has been a failure by the IAP adjudicator to apply the terms of the IAP which amounts to a failure to enforce the Agreement. 

Additionally, Justice Cote held that should circumstances arise which were not contemplated by the parties, courts must have the power to intervene to ensure that the parties receive the benefits of the Agreement.  In this case, the supervising judge erred in scrutinizing the initial adjudicator’s interpretation of the IAP and substituting his own.  He was only entitled to determine whether the adjudicator had considered the correct terms.  While the supervising judge erred in his analysis, this was an exceptional case in which reconsideration was appropriate.  J.W.’s claim had given rise to a unique dilemma for which the Agreement provided no internal recourse and which therefore required the court to craft a remedy.

Dissenting reasons were written by Justice Brown with Justice Rowe concurring.  Justice Brown held that the Agreement was a contract and therefore interpreting its terms required a court to discern the parties’ intentions.  The Agreement expressly precluded judicial intervention even where the IAP had been incorrectly interpreted and applied.  It is a complete code that limits access to the courts, preserves the finality of the IAP and respects the expertise of IAP adjudicators.  Given the finality promised by the IAP, the parties would have seen prolonged litigation of IAP claims in the courts to be undesirable.

 Merely because the Agreement does not contain certain terms does not mean that there is a gap waiting to be filled by judges.  

Regards,

Blair