Executive Summary: Key Legal and Evidentiary Issues

• Jurisdictional questions arose over whether the Federal Court held exclusive authority under section 18(1) of the Federal Courts Act to hear this dispute.

• Determining the true, essential nature of the claim — contractual rather than a challenge to a public-law power — was central to resolving that jurisdictional question.

• SDEI's request required proof of a strong prima facie case, since a mandatory interlocutory injunction, not a status quo order, was sought.

• Whether PT's refusal to renew the expired funding agreement amounted to bad faith or an abuse of rights remained a genuinely disputed factual issue unsuited to resolution at the interlocutory stage.

• Irreparable harm was contested, since SDEI's alleged loss consisted of quantifiable monthly funding payments that could be compensated by damages.

• Balancing the parties' respective interests required weighing SDEI's financial dependence on PT against PT's authority to restructure its own economic governance model.

Facts of the case

Société de développement économique Ilnu ("SDEI") was founded in 2000 by entrepreneurs belonging to the Ilnu First Nation of Mashteuiatsh, with a mission to support the establishment and growth of a network of businesses in the community; by 2025 it counted roughly 131 businesses and organizations as regular members. Pekuakamiulnuatsh Takuhikan ("PT") is the community's band council under the Indian Act, made up of the chief and six councillors. Since SDEI's founding, the two parties had renewed successive funding agreements of varying duration. The most recent agreement took effect on November 29, 2023 and, under its article 8.12, was set to expire on March 31, 2026; it provided SDEI with just over three million dollars in financial assistance over its term. PT, in turn, receives a portion of the funds it allocates to SDEI through an arrangement with Indigenous Services Canada.

In pursuit of a "new economic governance" model, PT sent SDEI a notice of amendment to the funding agreement in April 2025, and various meetings followed to discuss the proposed restructuring. SDEI's president and interim general director learned in February 2024 that PT's new governance plan involved dissolving SDEI. In February 2026, PT publicly announced the creation of a new governance structure for Mashteuiatsh, to take effect April 1, 2026, describing a more agile model built around a single point of access for entrepreneurs seeking support at every stage of their projects. Because PT has been SDEI's principal funder since its inception — through both its own resources and federal subsidies — this decision had direct consequences for SDEI's operations, its services to members, and the jobs of its 11 employees. SDEI therefore sought an interlocutory injunction, with an underlying declaratory claim, asking the court to order PT to comply with the funding agreement and pay the monthly amount set out in article 3.1, indexed, amounting to $94,012.67 starting April 1, 2026. PT opposed the application, maintaining it had honoured its obligations and disputing SDEI's ability to use an injunction to effectively renew an expired agreement; it also raised a declinatory exception, arguing the Federal Court held exclusive jurisdiction under section 18(1) of the Federal Courts Act.

Jurisdictional and contractual provisions at issue

Before reaching the merits, the court had to resolve whether it, rather than the Federal Court, could hear the case. Section 18(1)(a) of the Federal Courts Act gives the Federal Court exclusive first-instance jurisdiction to issue injunctions or declaratory judgments against a "federal board." The court accepted that a band council governed by the Indian Act qualifies as such a board, consistent with Horseman v. Horse Lake First Nation, 2013 FCA 159. PT argued its decision to restructure and not renew the funding agreement, agreement P-4, was a political choice flowing from its governance powers and therefore fell under section 18. SDEI countered that the dispute was purely contractual, pointing in particular to a separate 30-year right of use over land and a building granted by PT, not expiring until 2033, as part of the parties' broader relationship. Article 3.1 of the funding agreement — setting the monthly payment SDEI sought — and article 8.12 — fixing the agreement's March 31, 2026 end date — were the specific contractual provisions at the heart of the claim.

The court's reasoning and analysis

The court held that a body's status as a federal board does not, by itself, trigger the Federal Court's exclusive jurisdiction; what matters is the true nature of the dispute. Here, SDEI sought an injunction compelling PT to negotiate in good faith based on alleged contractual obligations, not to overturn an administrative decision or seek judicial review of a power granted under the Indian Act. The fact that the underlying funds originate partly from government sources did not change the essentially contractual character of the dispute. Relying on Canada (Attorney General) v. TeleZone Inc., [2010] 3 S.C.R. 585, and Canada v. JP Morgan, 2013 FCA 250, the court found PT was acting in a manner comparable to a private legal entity, so the matter fell to the Superior Court rather than the Federal Court.

Turning to the injunction itself, the court noted that because the funding agreement had already expired, SDEI's request was mandatory in nature — requiring it to show a strong prima facie case, per R. v. Canadian Broadcasting Corp., 2018 SCC 5, rather than merely a serious question to be tried. The court was not satisfied SDEI met this heightened standard: whether PT owed an obligation to renew the agreement, and whether its refusal breached good faith or amounted to an abuse of rights, raised genuine and unresolved questions of fact requiring a full trial record. On irreparable harm, the court acknowledged SDEI's potential financial difficulties but found the harm largely hypothetical and, in any event, compensable through monetary damages if SDEI ultimately succeeded on the merits.

Ruling and outcome

The court declared that the Quebec Superior Court, not the Federal Court, had jurisdiction to hear the application. On the merits of the injunction request, however, the court dismissed SDEI's application for an interlocutory injunction, finding it had not met the criteria required for a mandatory order at this preliminary stage. Costs were ordered to follow the outcome of the case on its merits. Pekuakamiulnuatsh Takuhikan was the successful party on the injunction application, and no monetary amount was ordered or granted in its favour or against it at this stage — the judgment addresses only jurisdiction and the refusal of interlocutory relief, leaving the substantive dispute, including any eventual damages, to be resolved at trial.